BREXIT – Unity of Europe challenged: RSBL

- Prithviraj Kothari, MD RSBL

Clearly FED dominated first quarter of 2016 with respect to price movements in precious metals market and specially Gold. Moving here, there are lot of key events that could be considered game changing for Gold and Silver prices.

The June FOMC left the borrowing rates target unchanged while St. Louis Fed president James Bullard said the U.S. economy might need only one interest rate increase through 2018. The Fed's actual pace of rate increases has been much slower than what was mapped out by the committee in the past. This mismatch between what they are saying and what they are doing is arguably causing distortions in global financial markets, causing unnecessary confusion over future Fed policy, and eroding credibility of the FOMC.

Gold prices endured an extremely volatile session last Friday after Thursdays aggressive wash-out, grinding its way higher throughout the European and U.S. days to close out the week on a positive note (+1.6% higher for the week).

The Bank of Japan also did nothing to reassure the markets with a "shock and awe" monetary ease, impotent to act on the eve of Brexit and the upper house Japanese Diet election.

Everyone has been talking of the Brexit and as to how it will affect Gold prices. Those concerns were echoed by policymakers around the world last week. The Bank of England called the referendum the largest immediate risk facing U.K. financial markets, and possibly also global financial markets. Lets have a look as to what exactly Brexit is and how will it affect the financial markets and more importantly what effect it can have on the yellow metal.

WHAT IS BREXIT:

 International policymakers are ramping up their warnings on the dangers of a British exit - popularly known as "Brexit" — from the political and economic alliance that has united Europe for the past four decades. Voters in Britain will decide whether to leave or remain in the European Union in a referendum on Thursday, but financial market volatility has already spiked as polls show a growing desire to abandon the partnership. 

HOW WILL IT AFFECT UK:

The International Monetary Fund on Friday issued one of the direst forecasts to date, calling the impact of Britain's departure from the European Union "negative and substantial." The fund predicted that a Brexit could reduce economic growth by up to 5.6 percent over the next three years in its worst-case scenario. The gloomy outlook is driven by an expected sharp decline in the pound and severe disruptions in trade as the nation is forced to renegotiate deals with countries across the continent, potentially on worse terms.

HOW IT WILL AFFECT GOLD:

Gold is the obvious beneficiary of a dovish Fed, negative interest rates in Germany and Japan and the safe-haven bid to hedge Brexit risk.If Brexit happens then we may see gold trade at $1350 an ounce in the days to come. If Britain does not vote to leave the EU, gold prices could fall to $1220 as an immediate liquidation move.

If Britain leaves EU, the other states would also look for this option and the idea of unified Europe would fail. The challenges are coming at an already weak moment for Europe's economy — and the world's. Europe is still recovering from the series of financial crises that have been roiling countries such as Greece and Italy along with others across the continent. Waves of refugees from the Middle East are spurring political and cultural unrest.

In short, A Brexit would be bad for the U.K., it would be bad for Europe, and it would be bad for the world, and will further add to the current global uncertainties thus sending shockwaves through all financial markets but a positive for safe haven status of Gold.

Thank You!

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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 prices Rise: RSBL - http://riddisiddhibullionsltd.blogspot.in/2016/06/gold-prices-rise-rsbl.html

Gold prices Rise: RSBL

                                                       - Mr. Prithviraj Kothari, MD RSBL

                           

 
Just when Gold was raising questions on its recent rally, last week’s labour report proved to be a saviour for the yellow metal. Gold prices traded sharply higher in Friday thus giving a technically bullish weekly high close to gold.

In May, the US non-farm workforce grew up only 38,000, missing the forecast of 160,000 and indicating that the US recovery may be starting to slow. Additionally, the March and April figures were revised 22,000 and 37,000 lower respectively while growth in average hourly earnings last month of 0.2 percent was below the predicted 0.3 percent. The Labour Department report released Friday showed employers added jobs in May at the slowest pace since 2010 as unemployment dropped to 4.7 percent, already reaching the level Fed officials expected to see by the end of 2016. Apart from disappointing headline NFP (nonfarm payrolls) number, there is a also a sharp jump in involuntary part time workers.

A much-weaker-than-expected U.S. jobs report prompted the yellow metal to surge higher, and those initial solid gains have been extended to show gold trading over $30 higher on the day. A sharp drop in the U.S. dollar index also helped push gold prices higher.

A broad slowdown is troubling for the Federal Reserve, which has grown increasingly hawkish in recent weeks following the April meeting minutes, giving their support to a rise in interest rates as early as this month if data warranted such a move. But a negative jobs report has once again left the markets perplexed per se the rate hike.

Considering the pliability of the US economy, has once again raised some questions about the momentum of growth and about the outlook. This in turn takes June off the table for a Fed hike.

Apart from the current news what needs to be watched this week for gold are:

1. THE MAIN EVENT: Fed Chair Janet Yellen's speech today at 10.00 pm.  
2. Central Bank (Rate Cut) Watch:

• Reserve Bank of Australia (June 7) no change expected
• Reserve Bank of India (June 7) no change expected
• Reserve Bank of New Zealand (June 9) 0.25% rate cut expected

Sentiments for gold are bullish and the major turning pint for this sentiment is the US dollar. Gold could remain in rally mode through the coming week as traders reassess their U.S. dollar and Fed outlook.

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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 –

" INTEREST RATE HIKE SPOILING GOLD PRICE RISE :RSBL" - http://riddisiddhibullionsltd.blogspot.in/2016/05/interest-rate-hike-spoiling-gold-price.html

INTEREST RATE HIKE SPOILING GOLD PRICE RISE :RSBL

 By Mr. Prithviraj Kothari, MD, RSBL

Just when gold had started entering in to the good books of majority of the market players, it once again started losing its appeal. Gold has started trending differently from the beginning of May. Along with platinum, palladium and silver, it is heading for the biggest monthly loss since November as investors anticipate higher borrowing costs in the U.S.

Gold has pared this year’s rally after retreating more than 5 percent in May as investors raised bets on the Federal Reserve increasing interest rates from as early as next month, causing the dollar to rally. Higher rates curb bullion’s appeal against interest-bearing assets.

At the start of this month, markets were excessively dovish, pricing almost no probability of a U.S. rate hike in June but a run of better U.S. economic data plus the minutes of April’s FOMC meeting have seen U.S. forward rates move up, the dollar rally and gold has naturally sold off.

The fundamental data released that changed the game for gold were:

• The U.S. Federal Reserve continued to lay the groundwork for an interest rate hike in the next two months, with Governor Jerome Powell saying he felt the U.S. economy was on a "solid footing" and within reach of the central bank's inflation goals.
• The U.S. economy is set to grow by a 2.9 percent annualized rate in the second quarter following the latest data on durable goods orders and advance goods trade, the Atlanta Federal Reserve's GDP Now forecast model showed on Thursday. 
• U.S. business spending intentions weakened in April for a third straight month amid soft demand for machinery, but a surge in contracts to purchase previously owned homes to a 10-year high supported views economic growth was gaining speed. 
• Japan's core consumer prices fell 0.3 percent in April from a year earlier, the second straight month of declines, keeping the central bank under pressure to deploy additional stimulus to achieve its ambitious 2 percent inflation target. 

Gold crawled higher early on Friday but stayed near seven-week lows and remained on track for its biggest weekly decline in nine, with positive economic data boosting expectations U.S. interest rates will rise in the next two months. The dollar stayed in consolidation mode early on Friday after its rally to two-month highs ran out of steam with bulls looking for fresh from the head of the U.S. central bank.

Now the market eagerly waits for the Fed officials will gather in Washington June 14-15 to decide whether to increase rates for the first time since December.

Thank You!

You may follow me on:

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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 –

"RSBL launches RSBL SPOT APP- Live Gold, Silver, Platinum  prices at your fingertips"

http://riddisiddhibullionsltd.blogspot.in/2016/05/rsbl-launches-rsbl-spot-app-live-gold.html

RSBL launches RSBL SPOT APP – Live Gold, Silver, Platinum prices at your Fingertips!

                                                   By Mr. Prithviraj Kothari, MD, RSBL

To know the price of Gold or Silver coin, a common man of India faces ever intriguing questions whether is this best price available in the market? Is the Jeweller charging me more? Will I get a better deal from some other Jeweller? If the price is fixed, the questions arises, Are the goods pure? Can I trust the brand?

Questions, Questions and only Questions to invest in what you love, trust and depend in the times of uncertainty i.e. Gold & Silver. To solve these questions, RSBL is glad to launch RSBL SPOT app on iPhone and Android compatible phones for one and all. A unique app that gives a user an access to Gold, Silver and Platinum live transparent benchmark prices across India!

RSBL SPOT is spread over 18 centers across India and the RSBL SPOT app user would get benchmark two way Buy/Sell quotes of more than 40 Symbols of Gold, Silver and Platinum which includes coin prices too across Indian markets. An app that gives an investor an edge while investing in Gold, Silver or Platinum.

Other special functions:

1. Live international Gold and Silver prices.
2. Gold Symbols with 995 or 999 purity in various denominations while Silver symbols available in 999 purity
3. Live rates on home screen via Widget (Android compatible phones only), even when the app is closed.
4. By registering yourself for free, you can insert price alerts. 
5. Live charts
6. News updates on Bullion industry, 
7. Blogs, 
8. Economic Calendar
9. Videos and so on.

Attaching some screenshots:

RSBL SPOT 

Home Screen

Symbols can be added/removed

Can be used even when RSBL SPOT
 app is closed

Live News

Economic Calendar

RSBL Spot is India’s leading platform for online physical bullion and coins sales with delivery centres spread across the country. RSBL Spot prices are transparent, two-way and continuous. They are the benchmark prices for majority of dealing by all jewellers.

RSBL Spot has revolutionized the bullion trading system in the spot market and is done at par convenience. Its objective is to maintain and improve its market leadership in providing customers with the most effective prices for dealing and physical delivery of gold and silver.

RSBL SPOT app comes with features that are never seen before! Make the most of this opportunity! 


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  Website:  http://www.rsblspot.co.in/
LinkedIn:  https://www.linkedin.com/company/riddisiddhi-bullions-limted
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Consolidation in Gold & Silver prices: RSBL

                                        By Mr. Prithviraj Kothari, MD, RSBL

So far this year has been positive for gold compared to the past couple of years. Reasons behind this are the current market uncertainty and unconventional monetary policies that have continued to support the prices of Gold along with central banks and ETF’s demand for gold has given a boost to Gold prices.

Gloom over the global economic outlook and concern over central banks’ firepower, uncertainty about China’s economic recovery and growing volatility ahead of the UK’s EU referendum next month are adding fuel to the fire.

Gold price action has been erratic at the start of the new trading month. At the start of May, gold surged to $1303, its strongest since January 2015, but earlier last week fell to a two-week low of $1257 and currently trading around $1250.

Precious metals showed a firm up move at the start of the week, with prices up an average of 0.7 percent, gold prices were up 0.5 percent at $1,271. But it has slowly faded and the down move has begun which could be due to the fact that over-extended gross fund long positions in Gold and Silver have made the markets vulnerable to a spate of profit-taking.

The Fed minutes released yesterday caused an increase in Dollar strength. The statements proved to be more hawkish than the market expected where some FED members would look forward to a June month rate hike if the economic situation improves. Labour market conditions continue to improve and the inflation progress is towards the committee objective but the consistency is important for the next hike to take place.

But physical demand in India has been a major obstacle. High prices and industrial action in India led to a 19-percent drop in jewellery demand that could not be offset by seasonal buying and the increase around the traditional gold-buying festivals.

Other data released during the week that influenced gold prices were:

• In US data released Thursday, weekly unemployment claims during the week ending May 7 raised for the third straight week to 294,000, above the forecast of 270,000.
• Import prices month-over-month in April ticked up 0.3 percent, under the economic consensus of 0.6 percent.
• The weak US data had sent spot gold to as high as $1,281 overnight but the rally proved short-lived as it was soon sold down to the mid-$1,260’s. 

The negative interest rate atmosphere in Europe and Japan, combined with uncertainty over the Chinese economy, anticipation of slower interest rate rises in the US and global stock market turmoil have proved to be in favour of gold.

The yellow metal along with Silver have been consolidating but are also holding up and what we need to watch is that whether it could suffer significant profit-taking given the extent of the long positions.

Until there is a sustained break above $1280, a new rally in Gold does not appear on the cards while Silver needs to break above $17.20. Currently, according to me in the Indian SPOT markets the Gold would trade in the range of INR 28,900 to INR 30,300 while in Silver the range would be INR 38,500 to INR 42,000.

Thank You!

You may follow me on:

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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 –

HAPPY AKSHAYA TRITIYA: RSBL

http://riddisiddhibullionsltd.blogspot.in/2016/05/happy-akshaya-tritiya-rsbl.html

Photo courtesy: Google search

RSBL: Gold & Silver prices rise

                                                                           By Mr. Prithviraj Kothari, MD, RSBL

Last week we saw gold prices setting to 15 month high on Friday.

This surge in prices was influence by nervous stock markets which raised gold’s safe haven demand. Currently A confluence of monetary and financial factors is supporting gold prices.

A solidly lower U.S. dollar index that hit an eight-month low Friday and Nymex crude oil prices that notched a five-month high are bullish "outside market" forces that are also propelling gold and silver prices higher.

On Wednesday, the US Federal Reserve continued its historically low nominal interest rates and didn’t signal to markets that another rate hike was forthcoming. We saw increased uncertainty in the markets on Thursday, one day after the Fed’s policy statement came out, but the Fed’s reflections had little to do with the market movements.

While in the US, unemployment claims hit a 42-year low of 247,000, which easily beat the 257,000 forecast. But US GDP increased by a 0.5-percent annual rate in the first quarter, the slowest pace since the first quarter of 2014 and below the 0.7-percent consensus estimate.

This paradox of a strong jobs market with tepid GDP growth has put the Federal Reserve in a bind. In its April statement released, the Fed decided to maintain near-zero interest rates despite noting that global risks had eased over the last several weeks.

Investors aren’t expecting the Fed to raise rates anytime soon with a majority of investors citing December as the most likely time for the Fed to rise rates again, according to the CME Group Fed Watch.

Additionally, the Bank of Japan’s (BOJ) shocked markets Wednesday by deciding to keep its monetary policy unchanged.

Now what needs to be watched is the action coming in for gold from the sidelined factors. Moreover what needs to be assessed is how the dollar will behave this week since currency continues to be the predominant driver in most commodity markets for the moment.

Thank You!

You may follow me on:

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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 -
 "BEST QUARTER FOR BULLION SINCE THREE DECADES: RSBL"
http://riddisiddhibullionsltd.blogspot.in/2016/04/best-quarter-for-bullion-since-three.html

Photo courtesy: Google search

RSBL: Why Gold is still cheap?

                                                                             By Mr. Prithviraj Kothari, MD, RSBL

Before jumping onto the main topic, I would like to essay out some facts about Gold prices this year. (Assuming Silver prices have more or less followed Gold prices). I am sure; lot of people would be feeling that US$60 is a big decline for Gold prices in the recent weeks and few would even have increased their bearish bets against the precious metal. I must warn them by quoting that even after the recent decline; the precious metal is nearly 16% up from its lows.

Then why there is a decline?

1.  The U.S. central bank surprised markets last week by cutting its rate hike projections more than expected, down from four to two in 2016, citing the potential impact from weaker global growth and financial market turmoil on the U.S. economy. This led to a rally in the U.S. dollar index and in turn bearish for the metal.

2.  There was a brief safe haven status which Gold gained due to the attacks in Brussels.

3.  Throughout the last week various Fed members including Patrick Harker, the Philadelphia Fed president,  have come out in support of raising interest as soon as April – if the economic conditions were to move.

4.  One more reason is the Easter Holidays, where I would see the profit booking in the Gold prices is quite understandable.

Now coming to the main topic: Why Gold is undervalued according to me?

1.       Reducing the number of rate hikes from 4 to 2, clearly states that FED isn’t sure how the world economy would fare in the longer run. Even when US economy has been showing some positive economic numbers, they are unable to take the most obvious step and when the inflation picks up faster than the central bank expects, they would have to increase the rates quickly.

2.       A dovish Federal Reserve, a weaker U.S. dollar and negative real interest rates will all be positive for gold this year. Over the recent years, the most dominant driver for gold prices has been the direction of the US dollar. As we are now expecting a lower dollar over the coming years we expect it to play a crucial role in the movement of gold prices. As for the Fed the analysts say that even if the Fed does raise interest rates later this year -- a scenario they see as unlikely -- they will be perceived as being behind the inflation curve high will once again be a pushing factor for gold prices as investors will likely buy gold because of lower US real yields and as some may see gold as a possible inflation hedge.

3.      There are lot of crucial political events this year:

a.   Current leadership crises in Brazil

b.  US presidential election in November

c.   U.K’s June vote over its membership in European Union.

All of them would leave a lasting effect if they go against the market.

4.      Terror threat across Europe, Syrian conflict and other Geopolitical tensions will always make Gold has the safest investment during the turmoil.

5.       Moody’s Investors Service highlighted China’s surging debt burden in lowering the nation’s credit-rating outlook to negative from stable earlier this month.

6.       We are in a tug of war between slow growth and high valuations on one side and central bank stimulus on the other.

Looking at the renewed turmoil in financial markets by highlighting the Fed’s policy divergence with the ultra-easy stances of the ECB and Bank of Japan, the near future seems bright for gold. 

Thank You!

You may follow me on:

      Facebook: https://www.facebook.com/prithviraj.kothari
         Twitter: https://twitter.com/prithvirajrsbl
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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 -
 "Brussels explosion and Gold's Safe haven appeal: RSBL"
http://riddisiddhibullionsltd.blogspot.in/2016/03/brussels-explosion-and-golds-safe-haven.html

Photo courtesy: Google search