Gold logs modest rebound from 6-months low

While we saw palladium diverged last week, gold prices remained weak. The strong dollar has been weighing on the yellow metal, but a stronger oil prices may well give it some support if stronger oil prices encourages investors back into commodity baskets.

Last week gold was on the negative side as its prices tracked lower in London on the morning of Friday November 18, with continued strength in the dollar pushing it to six-month lows.

The spot gold price was recently quoted at $1,208.45/1,208.70 per oz, down $6.55 on Thursday’s close. And reached $1203 earlier in the day -it’s lowest since May.

The dollar index was recently at 101.35, up 0.35% – it is holding around its highest for 14 years amid expectations that the US Federal Reserve will raise interest rates next month.

The US dollar has strengthened alongside increasing expectations of a US rate hike in December.

Fed officials who spoke last Friday had indicated that rates should go up next month and that the Fed could adjust its outlook as and when more details of president-elect Donald Trump’s policies become visible,.

“The market is almost fully priced for a rate hike in December at 98%.

Bullion has fallen 5.4 percent this month as of Friday's close, pressured by nerves around the U.S. election and speculation over the timing of an interest rate hike by the Federal Reserve.

The overnight Fed comments gave the dollar the support required to continue its stunning run higher and it is hard to see gold being able to rally the support required to break away from $1,200 as we head toward the December FOMC meeting.

US Federal Reserve chair Janet Yellen said that US interest rates could rise “relatively soon” due to an improving domestic labour market and stronger growth.

Should the US dollar continue to rally, gold is likely to remain under pressure.

These low prices have induced some interest in the physical market this increasing the demand for gold. Russia purchased the most gold in 18 years in October – central bank holdings rose to 50.9 million ounces from 49.6 million ounces, ANZ said in a note.

Gold prices rose in Asian trade on Monday, snapping a 3-session losing streak, buoyed by physical buying after the metal slid to a 5-1/2- month low on Friday.

Gold is highly sensitive to rising rates, which lift the opportunity cost of holding non-yielding assets such as bullion, while boosting the dollar, in which it is priced. Hence any positive development over the interest rate hike immediately puts pressure on gold this pushing its prices down

Meanwhile, gold premiums in India, the second largest consumer of the precious metal, jumped to two-year highs in the week to Nov. 18 as jewellers ramped up purchases on fears the government might curb imports after withdrawing higher-denomination notes from Circulation.

Spot gold seems to have found a support at $1,204 per ounce; it may hover above this level for one day or bounce moderately.

Gold moth continue to struggle against a backdrop of a firmer U.S. stock market, a stronger dollar and rising global rates and there are chances for prices to weaken below $1,200 in the next few weeks leading into the Federal Open Market Committee.

But ETF investors are continuing to pull out – holdings have dropped by 54 tonnes or 2.5% to 2,109 tonnes as of November 18 after rising 33 tonnes in October, 27 tonnes in September and 16 tonnes in August.

With US markets set to close later this week for Thanksgiving holidays, volatility is likely to be pronounced into the end of the month, Commerzbank noted.

#SaluteModi : RSBL

This was one of the boldest movements by the Government of India announced over a 40-minute speech. In one of the historical reforms of the economy of India, Rs 500 and Rs 1,000 notes were banned effective Tuesday midnight which is expected to bring in 7 lac crore in the RBI account.

The entire team at RiddiSiddhi Bullions ltd. supports this brave move of Our Respected PM Mr. Modi. We assure complete support for the successful implementation of these measures to fight corruption and illicit financial flows in India.  The majority of industry and commoners alike reacted to this decision with overwhelming support and we at RSBL will extend total cooperation for it. Our aim is to have a "black money free India".

US PRESIDENTIAL ELECTION EFFECT ON GOLD: RSBL

 By Mr. Prithviraj Kothari, MD, RSBL

As US elections head for the home stretch with both the leading candidates heading for a photo finish, financial markets across asset classes are jittery. Higher volatility is visible across all markets, be it oil, gold, bonds, currency or equities.

A prelude to how markets are expected to behave was given by world market on reports of Donald Trump closing the gap on Hillary Clinton in the presidential race. While most investors expected Hillary Clinton to win the elections, recent disclosures by Federal Bureau of Investigation (FBI) on Clinton’s e-mail controversy has helped Trump regain lost ground.

We shall take a look at how various asset classes are expected to behave if Hillary Clinton or Donald Trump moves to the White House. 

Gold markets thrive on uncertainty, it usually does before US elections. But this time around market experts feel uncertainty will continue and help gold prices if Trump wins. A Trump win is likely to bring in uncertainty till he comes clean on his policies. Equities are expected to drop down 10-15 percent . Rupee depreciation is expected and gold may rise up to 40-50 $

A Hillary win will leave markets unshaken. Since more are in favour of a Hillary win, her victory is not expected to make the markets volatile.

Irrespective of who wins studies  show that as the dust settles, the year following the elections could be bad for gold prices.   

US PRESIDENTIAL ELECTION EFFECT ON GOLD: RSBL

 By Mr. Prithviraj Kothari, MD, RSBL

As US elections head for the home stretch with both the leading candidates heading for a photo finish, financial markets across asset classes are jittery. Higher volatility is visible across all markets, be it oil, gold, bonds, currency or equities.

A prelude to how markets are expected to behave was given by world market on reports of Donald Trump closing the gap on Hillary Clinton in the presidential race. While most investors expected Hillary Clinton to win the elections, recent disclosures by Federal Bureau of Investigation (FBI) on Clinton’s e-mail controversy has helped Trump regain lost ground.

We shall take a look at how various asset classes are expected to behave if Hillary Clinton or Donald Trump moves to the White House. 

Gold markets thrive on uncertainty, it usually does before US elections. But this time around market experts feel uncertainty will continue and help gold prices if Trump wins. A Trump win is likely to bring in uncertainty till he comes clean on his policies. Equities are expected to drop down 10-15 percent . Rupee depreciation is expected and gold may rise up to 40-50 $

A Hillary win will leave markets unshaken. Since more are in favour of a Hillary win, her victory is not expected to make the markets volatile.

Irrespective of who wins studies  show that as the dust settles, the year following the elections could be bad for gold prices.   

5 YEAR (2011-2016) POST DIWALI ANALYSIS: RSBL

 By Mr. Prithviraj Kothari, MD, RSBL

Buying gold and silver is considered to be auspicious in most of the festival especially on Akshay Tritiya, Dussehra, Dhanteras and Diwali. Even jewellers project gold in different manner during festival season.  Jewellery houses offer attractive discounts and other such schemes to lure the customers. Some have gone a step further and are offering discounts on the making charges as well.

We usually hear in advertisement that “Diamond is forever” but for Indian market if we see craziness about gold than for us “Gold is forever” seems to be the apt statement.

A historical analysis shows that largely on the day of Diwali, gold prices witness a correction, while the price increase actually takes place around two weeks prior to the festival.

Generally I have always been asked what are your projections for Diwali, how does the market look etc. But this year I have put across a post Diwali gold analysis from 2011- 2016. Let’s have a look.

                   

Diwali 2011- Gold prices ended steady at INR 31,300 per ten grams in special Diwali trading on 26^th October,  on selective buying, while silver fell by INR 150 to INR 49,000 per kg on reduced off-take.
Traders said the gold remained steady on token buying by market participants to mark the beginning of new Hindu Samvat year 2070, while silver declined on lack of support.

They said buying activity was restricted and the volume of business limited. Gold buying in India, the world's biggest buyer of the metal, tapered off further after the festival week, even as domestic users started getting small import lots, weighing on premiums.
India, struggling with a high trade deficit and weak currency, had been trying to curb demand for gold, the second-biggest import item after oil. It has made gold expensive for consumers by setting a record 10 percent import duty and made supplies harder to come which kept gold more or less stablisied.

Diwali 2012- Generally, gold sales remain good throughout year but when festival season starts gold breaks record in terms of purchase demands in India. Its seems to be true for 2012 too. Although gold price was nearby INR 32,000/- per 10 gm. on Dhanteras, it did not affect the demand and the craze to own the yellow metal continued. Gold is considered as safe haven. Gold investment also helps in bad financial situation that is the reason people don’t hesitate in purchasing gold even at higher price.

Once again this year people showed added interest in purchasing Gold. That is the reason country’s top two exchanges BSE and NSE recorded a total turnover of over INR 2,200 crore in gold ETF on Dhanteras and simultaneously demand for gold coins and bars as also high. 

Although Gold was trading at a record price of INR 32,000 per 10gm. Investors were still investing in gold because they knew that investment in gold is secure as it gives return like 670% in 10 years which is difficult to achieve from other asset class and it was a life time high in 2012 which kept the faith of investors in the yellow metal alive

Diwali 2013-  Since 2013 was one of the worst performing years for gold, the demand for it declined too. In the domestic bullion market shows that demand had slowed drastically as compared to the last festive season. Gold prices were trading at levels of around

Rs30, 000/10gm and this factor to a great extent is seen as having a dampener effect on demand for gold jewellery. While compulsive gold shoppers would yearn to buy gold coins and bars, because of the tight supply conditions they may not be able to do so.

A firm global trend on speculation that the US Fed might maintain stimulus to boost economic growth also supported the sentiment, they said. On the other hand, jewellers were seen offering discounts on making charges in order to lure buyers. Then too, sentiments doing rounds in the gold market are on the weaker side for 2013  thus affecting big purchases among the small to-middle income group category

Diwali 2014-  Gold sales in India during the festivals of Diwali and Dhanteras celebrated this week rose by about a fifth, a senior official at the country's biggest gold trade group said

Premiums in India, the second biggest buyer of bullion, jumped to $17-$18 an ounce during Diwali. Diwali sales across the country were very good. It was about 20 per cent higher compared to 2013. The strong demand from India was supporting global gold prices.
India set a record high import duty on gold last year to curb its trade deficit, and made it necessary for importers to re-export a fifth of all their purchases. The move contained imports into the country, with the resulting supply shortage sending local premiums to about $160 an ounce over the global benchmark at one point. Some of the rules were eased earlier this year, leading to higher imports and a fall in local prices. This year prices were low, sentiment was good and there was a  stable government in the centre; all of these helped boost sales. In anticipation of strong demand during the festivals, India had imported $3.75 billion worth of gold in September - a 450 per cent jump from the same period last year.

India imported 151.6 tonnes of gold in November, up nearly 38 per cent from October, as traders bought aggressively expecting curbs on overseas purchases.

India last year levied a record import duty of 10 per cent on gold and introduced the 80:20 rules after surging trade and current account deficits sparked the worst currency turmoil since the 1998 balance of payment crisis.

But instead of putting in place more restrictions, the government surprisingly scrapped the so-called 80:20 rule in the previous month, mandating traders to export a fifth of all imported gold. Traders had few takers for the gold they bought in November.
Trading agencies were expecting curbs on imports and subsequently higher premium in December. So they imported more than their requirement but were then struggling to find buyers.

Diwali 2015- Rising for the second straight day, gold prices edged up by INR. 5 to reach INR. 26,235 per 10 grams on the eve of Diwali that fell on November 11.The bullion market witnessed increased buying by jewellers to meet festive and wedding season demand amid a mixed global trend.

Silver, however, met with resistance and dropped by INR. 535 to trade below INR. 35,000-mark at INR. 34,875 per kg. Traders said sustained buying by jewellers to meet festive season demand and a better trend overseas mainly kept gold prices higher.

Diwali 2016- Gold prices drifted lower by INR 100 to INR 30,650 per 10 grams in special 'Diwali Muhurat' trading at the bullion market on Sunday in the absence of worthwhile activity.

However, silver held steady at INR 43,000 per kg on scattered buying support from industrial units and coin makers. Traders attributed the fall in gold prices to absence of activity as jewellers kept buying restricted.

They, however, added that token buying activity on the auspicious occasion of 'Diwali' and the beginning of Hindu Samvat Year 2073 capped the fall.

Over all, unlike 2012, we did not get to see gold touching Rs. 32000 mark during Diwali since then. Gold seems to have been steady withing Rs. 25,5000- Rs.30,500 range around the festive season.

The primary purpose of this article by Mr. Prithviraj Kothari is to educate the masses of the current happenings in the Bullion world.

Previous blog:

"An Action Packed December: RSBL"

 http://riddisiddhibullionsltd.blogspot.in/2016/10/an-action-packed-december.html

AN ACTION PACKED DECEMBER: RSBL

By Mr. Prithviraj Kothari, MD, RSBL

Gold prices appear to have found a base either side of the $1,250 per ounce, basis spot, with prices now getting some lift and silver prices are well placed to challenge recent resistance $17.78 per ounce

On Friday, 21st October,  San Francisco Fed President John Williams said at a mortgage conference that "it makes sense to get back to a pace of gradual rate increases, preferably sooner rather than later." His comments followed recent hawkish talk from central bank officials including New York Fed Chief William Dudley and Fed's vice chair Stanley Fischer, which prompted investors to price in an interest rate increase this year. 

The main concern currently is the conflicting scenario between Fed officials like Fischer and Dudley who have been signalling a rate hike before the end of the year, while the ECB has arguably signalled a likely extension of its asset purchases.

The ECB kept interest rates at historic lows last Thursday, and its President Mario Draghi kept the door open for more stimuli, effectively quashing any speculation that the bank was poised to taper its 1.7 trillion euro asset-buying programme.

Being only a few days before the U.S. presidential election, many analysts are not expecting the Federal Reserve to take any concrete steps.

However, expectations for a December move jump to 75%, the highest it has been all year as we see all the action happening in December.

As we head into what has seasonally been the best time of year for the sector, here are a few possible major data release that could influenced gold prices during coming months.

November 4th: The Non-farm Payrolls Report (NFP) for October will be released on this date. The gold sector usually sells off into this report and becomes very volatile after the release as trades are set beforehand based on the expected number of jobs created. This is a highly anticipated report as the results will be heavily factored into the Fed’s decision process of whether or not to raise interest rates in December. The market is factoring in a 70% chance of a quarter point raise on December 14th as of this post.

November 8th: The US election could very well be a major promoter as during the last Presidential Debate, Donald Trump made accusations of the election possibly being rigged against him. He has also stated if defeated, he will not commit to accepting the outcome, stating “I will tell you at the time”. This is a very dangerous statement and could easily trigger violence after the outcome. Also, if victorious, the decision could very well cause a “Brexit” type response in the gold sector as Trump is the anti-establishment candidate. 

December 2nd: The release of the final NFP report before the highly anticipated last Federal Reserve Open Market Committee (FOMC) meeting of the year will be released . This could possibly be the deciding factor on whether or not Fed chairwoman Janet Yellen decides to raise rates this year.

December 14th: On this date the market will finally find out the answer to the question of, “will she, or won’t she”. If the Fed decides to raise rates at the conclusion of the December 13-14 FOMC meeting, the gold sector could initially sell off as it did last December. This could be a buying opportunity as rising rates have historically been bullish for gold as we saw back in the late 1970’s when former Fed chair Paul Volcker raised rates to over 20%. During this time gold had the largest bull market in history as it soared from $105 in September, 1976 to $850 in January, 1980. Also, in December of last year after 7 years of zero rates, the Fed finally decided to raise rates a quarter point. 

There are a lot of major U.S. reports coming and if the data is positive then there is no reason why the U.S. dollar can’t go higher and that could hurt gold. So as the world waits the month of December for its Christmas Celebration, the financial markets await the same month as a lot of action is bound to take place.

The primary purpose of this article by Mr. Prithviraj Kothari is to educate the masses of the current happenings in the Bullion world.

Previous blog:

"Gold Crashed But Lands Safely: RSBL"

http://riddisiddhibullionsltd.blogspot.in/2016/10/gold-crashes-but-lands-safely-rsbl.html

AN ACTION PACKED DECEMBER: RSBL

By Mr. Prithviraj Kothari, MD, RSBL

Gold prices appear to have found a base either side of the $1,250 per ounce, basis spot, with prices now getting some lift and silver prices are well placed to challenge recent resistance $17.78 per ounce

On Friday, 21st October,  San Francisco Fed President John Williams said at a mortgage conference that "it makes sense to get back to a pace of gradual rate increases, preferably sooner rather than later." His comments followed recent hawkish talk from central bank officials including New York Fed Chief William Dudley and Fed's vice chair Stanley Fischer, which prompted investors to price in an interest rate increase this year. 

The main concern currently is the conflicting scenario between Fed officials like Fischer and Dudley who have been signalling a rate hike before the end of the year, while the ECB has arguably signalled a likely extension of its asset purchases.

The ECB kept interest rates at historic lows last Thursday, and its President Mario Draghi kept the door open for more stimuli, effectively quashing any speculation that the bank was poised to taper its 1.7 trillion euro asset-buying programme.

Being only a few days before the U.S. presidential election, many analysts are not expecting the Federal Reserve to take any concrete steps.

However, expectations for a December move jump to 75%, the highest it has been all year as we see all the action happening in December.

As we head into what has seasonally been the best time of year for the sector, here are a few possible major data release that could influenced gold prices during coming months.

November 4th: The Non-farm Payrolls Report (NFP) for October will be released on this date. The gold sector usually sells off into this report and becomes very volatile after the release as trades are set beforehand based on the expected number of jobs created. This is a highly anticipated report as the results will be heavily factored into the Fed’s decision process of whether or not to raise interest rates in December. The market is factoring in a 70% chance of a quarter point raise on December 14th as of this post.

November 8th: The US election could very well be a major promoter as during the last Presidential Debate, Donald Trump made accusations of the election possibly being rigged against him. He has also stated if defeated, he will not commit to accepting the outcome, stating “I will tell you at the time”. This is a very dangerous statement and could easily trigger violence after the outcome. Also, if victorious, the decision could very well cause a “Brexit” type response in the gold sector as Trump is the anti-establishment candidate. 

December 2nd: The release of the final NFP report before the highly anticipated last Federal Reserve Open Market Committee (FOMC) meeting of the year will be released . This could possibly be the deciding factor on whether or not Fed chairwoman Janet Yellen decides to raise rates this year.

December 14th: On this date the market will finally find out the answer to the question of, “will she, or won’t she”. If the Fed decides to raise rates at the conclusion of the December 13-14 FOMC meeting, the gold sector could initially sell off as it did last December. This could be a buying opportunity as rising rates have historically been bullish for gold as we saw back in the late 1970’s when former Fed chair Paul Volcker raised rates to over 20%. During this time gold had the largest bull market in history as it soared from $105 in September, 1976 to $850 in January, 1980. Also, in December of last year after 7 years of zero rates, the Fed finally decided to raise rates a quarter point. 

There are a lot of major U.S. reports coming and if the data is positive then there is no reason why the U.S. dollar can’t go higher and that could hurt gold. So as the world waits the month of December for its Christmas Celebration, the financial markets await the same month as a lot of action is bound to take place.

The primary purpose of this article by Mr. Prithviraj Kothari is to educate the masses of the current happenings in the Bullion world.

Previous blog:

"Gold Crashed But Lands Safely: RSBL"

http://riddisiddhibullionsltd.blogspot.in/2016/10/gold-crashes-but-lands-safely-rsbl.html