RSBL Gold Silver Bars/Coins

Tuesday, 29 December 2020

Trump signs the stimulus bill

 Gold prices were thrown about last week as the dollar rebounded sharply from 2-½ year lows after the British pound crumbled on fresh Brexit woes.

Gold tumbled early in the week on the dollar's strength before recovering in recent days on the stimulus drama. The rebound fell short, however, of its Friday settlement of $1,888.90, resulting in the weekly loss reported RSBL team.

Gold prices jumped as much as 1% on Wednesday, bolstered by a weaker dollar, while investors kept hopes pinned on a U.S. stimulus package even after President Donald Trump threatened to not sign the relief bill.

Gold prices rose on Thursday but still finished with a weekly loss, after the twist to a U.S. coronavirus stimulus package and the dollar’s unexpected gains in recent days prevented the yellow metal from extending a three-week rally.

President Donald Trump threatened to not sign an $892 billion coronavirus relief bill, seen as a lifeline for the nation’s pandemic-battered economy saying the amount in the stimulus checks should be increased.

Gold has also been tugged around since Sunday’s deal by U.S. Congress on a $900 coronavirus stimulus and $1.4 trillion in federal government funding. Both those packages are now at a midpoint after President Donald Trump’s refusal to sign them, particularly due to his objection over a measly $600 in personal Covid-19 aid for needy Americans approved by his own Republican party.

But that didn’t affect gold much because Even if Donald Trump declines to sign the bill, it is widely expected that Biden will make it pass.

But against all expectations, the Trump signed the stimulus bill on Monday. Amidst these speculations and developments over weekend Brexit deal, uncertainty over these issues will finally be clear. 

Trump on Sunday signed into law a $2.3 trillion pandemic aid and spending package, restoring unemployment benefits to millions of Americans and averting a partial federal government

The gold (0.27%) price moved higher in early EU trade on Monday. One of the reasons for the move higher in gold came as outgoing US President Donald Trump signed the COVID 19 relief deal.

Volatility continues for gold and silver this week amid a rollercoaster on the U.S. stimulus, new virus strain, and volatility in the dollar index.

Gold markets have gone back and forth during the course of the week, showing signs of exhaustion. Ultimately, top gold dealers across India think that if we get a pullback, we could see an opportunity to pick up gold “on the cheap.”

Over the long term, markets look volatile with a lot of instability on geopolitical grounds. Markets continue to remain in panic mode over the new strain. Moreover massive amount of liquidity has been forced into the market. 

As the uncertainty continues, it’s expected for investors to move to gold in order to protect their wealth. Given this, gold is expected to wave goodbye to 2020 on a positive note.

Monday, 21 December 2020

Buy on Dips

 Gold price attempted to push through the key psychological resistance level of $1,900 an ounce this week but ended up settling just below that on Friday. Gold prices hollowed in on Friday as the decrepit dollar bounced back from 2-½ lows. But that didn’t stop the yellow metal from posting a third straight weekly rise from gains accumulated on bets that the U.S. Congress will soon pass another corona virus fiscal relief.

Gold futures settled with a loss on Friday, but tallied a gain of about 2.5% for the week following a decline in the U.S. dollar. Top gold dealers in India and across the world believed the following to be reasons that had an impact on the dollar:

There were three major events this week that had a profound impact on U.S. equities, gold, silver and the U.S. dollar.

  1. Bipartisan deal- The first major event was a renewed optimism on the revision of a bipartisan proposal which was introduced last week. 
  2. FOMC Meet- a key event that had a huge impact was the information from the Federal Reserve that was presented through this month’s FOMC statement and the following press conference by Chairman Powell immediately following the conclusion of the last FOMC meeting year. 
  3. Vaccine- The third event that influenced the financial markets this week was the rollout of a Covid-19 vaccine that had just been granted emergency use authorization by the FDA.
After US Fed pretty dovish views we saw a collapse of the US Dollar and a big run up in gold and bit coin on Thursday. Though it hit most mentioned targets and even surpassed it to kiss $1901 an ounce.

Analysts from RiddiSiddhi Bullions Limited viewed that with the end of the pandemic was in sight, the U.S. dollar is behaving less like a safe-haven asset, and the currency is weakening, adjusting to its own fundamentals, suggesting strong support for gold.

Gold markets initially fell during the week, but then turned around to recover quite nicely to break above the top of the shooting star from the previous week. This suggests that perhaps gold is trying to turn things around and take off again. The $1900 level will offer a certain amount of psychological and structural resistance, but I do think that we break above there and eventually go challenge the $1950 level. That being said, it does not mean that we get there right away.

So it’s about the $900 billion Covid package from the US. Unless the USD index will now move beyond 90.5, gold will see bounce towards $1905-1915. On Friday the gold market was quite zig zag. Gold has rallied again during the week, breaking above the top of the shooting star from the previous one. It suggests that we still have plenty of momentum.

We would suggest buying gold on dips on levels $1878/1863/1858 and upper side it is expected to reach $1904/1930. So buying in dips would be the investment mantra.

Wednesday, 16 December 2020

Vaccine bubble may fizzle out soon

 Precious metals are heading for the first quarterly loss since 2018. Optimism surrounding vaccines and signs of recovery have dampened the demand for gold as a safe haven asset. Even as leading central banks continue to offer support for economies, the lustre on gold seemed to be little faded on Monday. This week, investors will keep a close watch on the Federal Reserve’s final meeting of the year, with markets widely expecting fresh guidance on its asset-purchase program.

It must be noted that gold prices have recorded year-to-date surge of 22%. This is despite the recent sharp fall in prices during the past month, when it had retreated almost 15%, compared with the highs recorded in the month of August.

Gold turned bearish in the second week of August, following a major bullish trend which lasted for a couple of years. This year, the bullish trend picked up further speed, due to the Coronavirus and the global economic recession, which turned traders towards safe havens.

But the bearish reversal came in August, and gold has been declining since them, pulling down silver as well, where we have an open sell forex signal

The gold prices witnessed phenomenal jump, mainly triggered by global economic concerns triggered by the rapid spread of Covid-19 pandemic. The optimism surrounding the vaccines against the virus has resulted in a rally in global stock indices, suggesting the chances of economic revival. However, it remains unsure as to when the vaccine could reach the entire population of the world. Also, its effectiveness continues to remain as a big question.

Gold prices fell 1% on Monday as hopefulness for a faster economic recovery got an incentive from the forthcoming release of COVID-19 vaccines in the United States, but hopes for further fiscal and monetary stimulus capped bullion's losses. Spot gold fell 0.9% to $1,822.90 per ounce during Monday’s trading session.

Gold was seen weakening over gradual global recovery, strengthening European equities, an extension of Brexit trade talks and with the vaccination of U.S. citizens with a COVID-19 vaccine. But, limiting gold's losses were reports of a $908 billion U.S. COVID-19 relief plan that could be introduced as early as Monday after a leading Democrat lawmaker suggested his party might be willing to reach a compromise.  

With the Fed’s intentions to ease policy by increasing the average maturity weighting of its Treasury purchases following the December FOMC meeting, gold enthusiasts may not need to wait much longer for a convincing move higher. 

Gold benefits from its appeal as a hedge against inflation that could result from the unprecedented stimulus unleashed in 2020. Analysts across the world, told gold dealers in India and investors now await the U.S Federal Reserve's two-day policy meeting starting on Tuesday.  

The vaccine bubble is going to fizzle out soon as things will take lot of time for complete implementations worldwide. There is a big IF among the vaccine takers, as its side effects rumours are gripping and that might place doubts in the mind of general masses. This could possible trigger gold. 

RiddiSiddhi Bullion Limited officials offered optimism and said that gold could rally in 2021 when the vaccine optimism dies down and investors’ focus returns to rising inflation expectations due to the large swathe of monetary and fiscal stimulus the U.S. economy still requires.

Wednesday, 9 December 2020

Stimulus for economy boosts gold prices too RSBL

 After a weak November, gold once again strengthened this month over varied reasons. Gold recovered more than 5% since slumping to a five-month low on Nov. 30, with November also marking bullion's worst month in four years, pressured by hopes of a vaccine-fuelled economic recovery.  

Gold is revering from one of its most fierce sell-offs ever, after new breakthroughs in COVID-19 vaccines and their possible availability before the year end caused a run on money in safe-havens.

 November was the worst month for gold in this year. The yellow metal lost about 6% of its value in November, its most for a month since 2016 and fell into $1,700 territory. Investors have in recent weeks directed money mostly into stock markets and other risk assets such as oil, as those witnessed an epic rally amid the notion that vaccines and therapeutics would soon bring an end to the spread of the corona virus.

But December came in as a surprise for gold. Gold gained more than 1% to a two-week high on Monday, augmented by prospect of fresh fiscal stimulus in the United States. Despite the continued emphasis on risk, gold as a haven is rallying again on talk of a new U.S. Covid-19 stimulus efforts. Monday’s rally in gold was reignited by Congress’ aim to scrape together a corona virus relief package before the end of this week and prevent a lapse of benefits that could send millions of Americans spiralling further into financial peril at the end of the year.

Gold prices resumed their run higher, picking up from last week’s three-day rally, on signs that U.S. lawmakers were closing in on a fiscal deal to keep the government open and continue with pay check protection for millions of Americans stressed by the Covid-19. U.S. lawmakers sought to hammer out an agreement on infusing long-awaited relief through a $908 billion Covid relief package soon. 

Analysts and top gold dealers all around the world agreed that lawmakers aim to pass both pandemic aid and spending legislation before the government shuts down on Saturday. They will have to quickly resolve several sticking points to meet the deadline.

Democrats, who control the House of Representatives, have backed the plan as the basis for an emergency relief bill as a sustained Covid-19 infection surge stresses hospitals across the country. Republicans, who have a majority in the Senate, have indicated they will support the measure without specifying how much exactly in dollars and cents. Fresh restrictions might also we witnessed. 

The stimulus plan has helped stabilize the gold market because more money being pumped into the financial system is inflationary.

Gold prices typically rally in any stimulus or monetary expansion exercise.

Any kind of stimulus measure will result in rising inflation. And time and again gold has always been considered as a hedge against inflation. Any such situation will result in a rise in gold prices which has already gained 22% so far this year.

Apart from the stimulus package, important data was also released and many important numbers are yet to come this week. The US payrolls data had mixed statistics. While employment rates improved, there was dip in overall monthly payrolls compared to expectations. Now the falling USD at 90.7 is supporting precious metals. As mentioned last week by industry and RSBL spokesperson that gold at $1850-185, a crucial barrier and even in Friday it attempted $1852 and gave up later.  Gold made a good bounce back on Monday, hitting the precise $1865 and MCX above 50,000 in rupee terms. Gold looks positive and traders are still looking for dips to buy.

Furthermore, the US- Sino tiff continued as the United States imposed sanctions and a travel ban on 14 Chinese officials over their alleged role in Beijing's disqualification of elected opposition legislators in Hong Kong. Meanwhile, Britain was set to become the first country to roll out the Pfizer/BioNTech COVID-19 vaccine this week.

Historically, a rise in uncertainty and fear is the single biggest factor that leads to a spike in prices of gold as central banks increase the pace of gold purchase. If uncertainty around the pandemic propelled prices beyond Rs 57,000 per 10 grams in August (from around Rs 40,000 in January 2020), it should be remembered that it is not yet over, and is certainly not the last risk the world will see. Gold prices get impacted by several factors including geopolitical tensions, interest rate movements and change in value of the dollar with respect to other currencies.

Tuesday, 1 December 2020

Gold will be back soon

 The past week or for that matter, the month of November wasn’t that great for gold. . The price of the yellow metal plunged then from $1,840 to $1,780 last week. Actually, gold prices dropped from a local peak of $1,941.

On Friday, gold broke below the key $1,800 support level to reach 5-month lows. Gold prices plunged over economic recovery, hopes of quick vaccine availability and a smooth White House transition. These same reasons were responsible for pushing the share markets to new record highs.

Well let’s have a look over the reasons for this downside in gold- 

Covid-19 Vaccine- Well, it seems that the positive news of the vaccines eliminated the negative tail-risk related to the pandemic. In consequence, the safe-haven demand for gold declined.

Bit coins- On the other hand, the price of Bitcoin jumped recently as investors increased their risk appetites and diverted their attention from gold. 

US Election results- The elections results also reduced the uncertainty in the marketplace. In other words, the economic outlook is improving as the uncertainty clouds begin to part.

Smooth transition - President-elect Joe Biden announced the beginning of a formal transition of power from Trump’s administration to his. Biden also started to announce nominations for top positions, which served to reduce the risk that a contested election had for uncertainty among investors.

Fed Chief- there are rumours that Biden is likely to tap former Fed Chief Janet Yellen to become the next Treasury secretary. Investors know her and trust her, so they welcomed the possibility of her nomination for a key position in the new administration).

Fiscal Package prospects- Yellen, who is seen as a possible candidate for the Fed Chief post, is expected to be a great supporter of bigger government economic aid. Actually, she has for some time been calling for increased government spending to help combat the recession and has always been concerned about the labor markets, low participation rates and high unemployment. As well, as the former Fed Chief, Yellen will closely cooperate with the US central bank and will listen to the Fed’s calls for a fiscal package. She will, therefore, help sustain high government expenditure to assure that the labor market is recovering. Any for, of possible recovery has led to a downfall in gold prices. 

Top gold dealers in India believe now what we really need to focus on is the year end. There are many factors that will play a key role as 2020 comes to an end.  Gold may be bullish right now, but we have many other reasons that cannot be ignored and which can turn the table for gold. 

In the next few weeks leading up to the Christmas holidays, the market's attention will shift to how severe the COVID-19 restrictions will be, whether there will be any more stimuli this year, and what more can the Federal Reserve do to help, according to analysts. RSBL analysts confirmed that the market sentiment will be more likely influenced by news on the timing of a vaccine and concerns about a near-term intensification of Covid containment measures in the wake of Thanksgiving gatherings.

Any rise in cases will lead to a pressure on medical emergency services and will lead to further restrictions. Jobs markets have suffered due to curfew and these restrictions have been imposed in many parts of US. Further, new restrictions could harm the economic recovery, which is already struggling to recover. 

Furthermore, if we get some type of big move against the US dollar, that could have gold turning around as well. Central banks around the world will continue to throw liquidity at the markets ad this will definitely bring gold back into the market. 

The next phase of this bull cycle will rely on a lower U.S. dollar and this is really the main, key factor that will allow the price of gold to move much higher.