Bullish trends for Gold

Gold prices were holding well up during the past week breaking the long term downward trend that started off in 2011.  A weaker dollar and lower treasury yields has been supporting gold prices lately.
Gold steadied on Thursday after nearing a seven-week high in the previous session as investors awaited U.S. jobs data for further clues on the outlook for interest rate rises.Spot gold was 0.1 percent higher at $1,267.30 per ounce.

Gold rallied through most of July as the dollar fell on reduced expectations for a third U.S. rate rise this year. Inflation has been contained even though the labor market appears to be in its best shape in many years and despite double-digit U.S. earnings growth in the second quarter.

Reduced rate rise expectations tend to weaken the dollar, making dollar-priced gold cheaper for non-U.S. investors.

But by the end of the last week, gold prices were slightly bullish after the release of U.S labor report.
The latest non-farms payroll report on the US employment market was published, showing the economy added 209,000 jobs last month and that unemployment was low at 4.3 per cent, its lowest since March 2011.

This smashed economist estimates that 183,000 new jobs would be added. In response the dollar has popped higher, says Reuters.

The dollar is inversely correlated to the gold price, which is often held as a hedge as the global benchmark reserve currency.

Stronger economic data also raises the prospect of the Federal Reserve voting for a third rate rise this year in either September or December (rate rises tend to hurt non-income yielding assets like gold).
In the two hours after the report came out the gold price slumped by around $13, or one per cent, to $1,255 an ounce.

Gold's recent trend has been largely defined by the fortunes of the dollar, which is good news for gold bugs as the greenback was languishing near 15-month lows earlier this week.

The safe haven metal dropped from $1268 as the July non-farm payrolls figure came-in at 209K, beating the estimated figure of 180K. The jobless rate dropped to 4.3%, while the June trade deficit narrowed more than expected. Wage growth rose to 0.3% as expected.

Now the influential factor for gold remains that whether the dollar continues to strengthen or it may go weaker, which is likely to mean the US Federal Reserve has to remain less than hawkish. Apart from these financial drivers, any pick up in geopolitical issues could also fuel the rally.

HAPPY AKSHAYA TRITIYA: RSBL

                                                    By Mr. Prithviraj Kothari, MD, RSBL

Firstly wishing everyone a very Happy Akshaya Tritiya. May this year be filled with wealth and prosperity.

We have seen many stories being revolved around this auspicious occasion. Our mythology and scriptures are filled with many interesting stories that relate to Akshaya Tritiya. Out of those, the tale if friendship between Lord Krishna and Sudama is relevant not only to understand the importance of this day, but also to emphasize on the need of having a true friend.

Sudama, also known as Kuchela, was one of Krishna’s childhood friends and the two share an equation so strong that it has become a legend of sorts. According to Hindu mythology, while Krishna went on to rule Dwarka, Sudama led a simple life and could hardly make ends meet. He needed all the financial assistance he could to led a normal life. Sudama led a life of poverty. 

One day, his wife could not bear to see their children hungry and said “can’t you ask Lord Krishna for help?” Sudama agreed but decided that he would not ask Krishna for anything. Then Sudama's wife borrowed some puffed rice from a neighbor and gave it to Sudama as a gift for Krishna. When Sudama came to Dwarka, Krishna was overjoyed! Then, he saw his pouch and snatched it fro

m his hand. “Puffed Rice! My favorite dish!” said Krishna and he ate a handful of rice greedily. 

Before he could take a second handful, Rukmini, stopped him, saying “One mouthful will give him all that he needs my Lord!”/ The next morning, Sudama left Dwarka. As he approached his house he saw a grand mansion. His wife and children came out wearing jewels and fine clothes. Sudama was filled with joy and happiness as his friend had given him more than he ever needed. The day when Krishna blessed Sudama with abundant wealth was marked as Akshaya Tritiya. 

This is one of the reasons why this day is celebrated as a day of material gain and wealth. Hence the custom of buying gold, silver, real estate etc has been followed.

Once again, it’s that time of the year where everyone is talking about investing in gold! Buying gold funds, jewelry and coins on Akshaya Tritiya is considered the best way to invest your wealth on this auspicious day. Though nowadays people look for other avenues like real estate, gadgets but nothing can replace gold.

 As the history of our country has it, after Dhanteras, maximum purchase of Gold, Silver and Platinum happen on this day.

People this year are full of mixed feelings-anxiety, excitement, nervousness as a lot is been happening around gold since the past few weeks.

Generally we also witness a price rise few days ahead of Akshaya Tritiya due to the rise in demand for the yellow metal.

In fact demand for gold this year is expected to be better than last year because-

Monsoons- A good monsoon will lead to rise in demand for gold prices this year which will ultimately boos prices. Those who expect further rise in gold prices may advance their purchases.

Strike- the jewelers went on strike after the announcement of excise levy. The industry is gearing up to meet the pent-up demand, which will be witnessed during this Akshaya Tritiya. There were many players who couldn’t make their purchases during the strike and will now enter the market to buy gold on this auspicious day

Gold rally- Recent rally in gold prices due to global influential factors have propelled investors and traders to anticipate further price rise which has pre-poned their purchases of the yellow metal.

As we all know this quarter has been the best quarter for gold in the past three decades. Prices have ranged between Rs.24, 910 to Rs.30, 300 per 10 gram. On one side where we see sales dampening due to this high volatility, on the other hand we also expect the demand for gold to rise given the global and domestic factors that have been influencing gold.

Traders also anticipate that in terms of volume, consumer demand might witness a negative growth of about 10%, but in value terms, it is likely to be at par with last year’s sales.

Above all demand for gold this year is expected to be comparatively better that the past 2 years.

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: Gold & Silver Price Rise"

http://riddisiddhibullionsltd.blogspot.in/2016/05/rsbl-gold-silver-prices-rise.html

GOLD GLITTERS ALL THE WAY: RSBL

By Mr. Prithviraj Kothari, MD, RSBL 

As I mentioned last week in my blog that gold is regaining its safe haven appeal, this week we saw this sentiment strengthening further.

Gold was like literally all over the world this week as we saw the yellow metal gaining its safe haven appeal in its true sense after a long wait. Sentiment in the gold market remained sturdy after prices hit a one-year high in a figurative move.

This was the third consecutive week that gold witnessed positive gains, with increasing more than 5.3%- the biggest weekly percentage gain since late October 2011.

Analysts have noted that the yellow metal’s push back above $1,200 an ounce generated a lot of focus and positive sentiment among appalling investors looking for a safe-haven.

Many analysts are bullish on gold, expecting sentiment to continue to grow as prices have broken through key technical barriers, culminating in a weekly high at $1,263.90 an ounce.

Spot gold was last at $1,240.50/1,241.20 per ounce, having rallied around 22 percent since the start of the year.

The gold price rallied to a high on Thursday of $1,263.30 per ounce, up five percent and it’s strongest since February 6 last year when it peaked at $1,268.90.

Since this rally came in suddenly, there were many investors that missed on to bank on the gains. The speed of the rally and its strength suggest many would-be investors have been chasing prices, having not been able to take advantage earlier in the rally – they had lost faith in gold as a safe-haven given the four-year bear market.

This volatility was influenced by more than one factor. It was a combined effort of the following-

Dollar- Sentiment towards gold has changed dramatically, and gold has even moved up on some days in the face of a dollar rally. With a change in sentiment, those underweight or waiting on the sidelines started buying gold which furtherer fuelled gold prices.

The precious metal benefitted from a softer dollar, which had failed to attract safe-haven demand despite the global instability – the currency was last trading at a four-month low at $1.1349 against the euro.

A softer dollar is making gold more affordable for holders of other currencies – it has fallen around four percent this month, having already rallied strongly over the past 14 months – the dollar index climbed to 100.50 in December from around 70 in January last year and was last at 95.58.

Fed- As part of a two-day congressional hearing, Federal Reserve Chairwoman Janet Yellen attempted to reassure markets that US growth was steady and the labor market was improving.

Yellen and her fellow colleagues are being criticized for exacerbating the instability after raising rates in December – rates were static around 0 percent since December 2008.

And the US Federal Reserve, having raised rates in December for the first time in nine years, has not ruled out a push into negative territory. The chances of further rises this year have receded significantly, according to market consensus.

Because gold has no yield, it loses some of its luster when interest rates are rising. But negative interest rates negate this disadvantage while highlighting economic weakness against which gold is historically seen as a hedge and preferred as one of the safest modes of investments compared to its counterpart.

China- since the Chinese markets remained closed for the Lunar Celebration, there was nil reaction from that side and hence gold prices shot up one side.

With China absent from the market for its New Year holidays this week, the market now waits to see the reaction of Chinese investors upon their return on Monday, particularly as the US will be absent on this day for Presidents day.

All eyes will be glued to the return of the Chinese markets as investors are eager to see what they actually bring to the surface post this week’s volatile developments.

Equity- The gold price benefited from the meltdown in equity markets, as the yellow metal continued to hold around one-year highs. Weak equity markets have spooked investors and they promptly dumped risky assets and rushed to gold, which is seen as a safe-haven.

Other Economies-

Uncertainty about global growth and a mass sell-off in global equity markets unsettled investors, burnishing gold’s safe-haven qualities, while Japan, Switzerland, Sweden and Denmark have adopted negative interest rates.

European Central Bank (ECB) president Mario Draghi is expected to follow suit at the bank’s March meeting, citing inconsistent growth concerns and non-existent price increases.

Since the decision, Japan lowered deposit rates into negative territory and European Central Bank President Mario Draghi is expected to implement the same policy as soon as March.

Both economic regions are struggling with poor economic growth and non-existent inflation despite billions in easy money and years of near-zero interest rates.

Negative interest rates are generally good for gold as the improbability and agony linked with negative rates tends to surge interest in gold, but the more distinct shift of monetary policy in this direction by central banks is encouraging even greater flows into bullion.

Although it is a shortened week with markets closed Monday for Presidents Day, the U.S. economic calendar will be busy with the release of regional manufacturing reports, housing sector data, and the release of the Consumer Price Index for January.

While analysts are positive on the gold market, they are not ruling out some weakness at the start of the week.

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 Regaining Its Safe Haven Appeal: RSBL"

http://riddisiddhibullionsltd.blogspot.in/2016/02/gold-regaining-its-safe-haven-appeal.html 

GOLD REGAINING ITS SAFE HAVEN APPEAL: RSBL

By Prithviraj Kothari, MD, RSBL

Recently investors have begun flocking to traditional safe-haven assets like gold and eschewing more risky stores of wealth as 2016 has been characterized by frazzled markets and mounting tensions stemming from the global equities rout. 

In recent days, the rally has been driven by erosion in the dollar, which is down to October lows and was last trading 1.2 percent softer at $1.1220 against the euro.

Gold is once again gaining its safe haven appeal as it gets influenced by depressed oil prices and low inflation. These factors are raising concerns over Fed policy expectations and global economic development.

A potential slowdown in the American manufacturing and services industry has created questions over the timing of the Federal Reserve rate hike and target of roughly a two percent fed funds rate by year end.

A majority of market participants do not see a rate hike happening this year, compared to a week ago when consensus was for an increase in July.

Earlier this week, Federal Reserve Bank of New York president William Dudley said that tighter financial conditions would be taken into account at the next Fed policy meeting in March – investors interpreted this as a further delay in a US interest rate hike.

As markets await further news from the Fed, they were also awaiting the US jobs reports to see whether it created a negative or positive impact in the economy.

Trade was volatile following a mixed US employment report, which showed that 151,000 jobs were added in January, missing the 189,000 forecast. However, the unemployment rate did tick down to 4.9 percent and wage growth was strong. December meanwhile was revised down to 262,000 from 292,000.

However, after years of low wages and non-existent inflation, wage growth increased the most in a year at a 0.5 percent gain, besting the estimate of 0.3 percent.

A substantial wage boost shows the labor market is beginning to tighten and it is becoming more difficult for employers to find available workers.

That news along with the reduction to 4.9 percent in the headline employment figure was enough to spur the dollar after it had sunk to the lowest point since October. The greenback last traded 0.8 percent stronger at $1.1127 against the euro.

Gold futures edged higher after trading in negative territory throughout most of the day as a downturn in US equities offset a stronger dollar.

Now it’s becoming clearer that the lows for dollar denominated gold have been seen after an extended, weakening four year bear market. 

The deterioration in the American currency begins as a global equities rout hit all three major economic regions led by fears of a possible US recession and hard-landing in China.

Investors have questioned the timing of the Federal Reserve’s first rate hike and now don’t expect another increase until the second half of 2017, according to the CME Group Fed Watch.

The global macro environment has so far been positive for the precious metals market.

The poor start to the year has investors questioning the timing of the Federal Reserve’s first rate hike, with various Fed members stating the Fed’s policy would monitor and assess financial conditions.

Before the global uncertainty, March was estimated to be the next date for another rate increase as the Fed needed a gradual schedule to reach the target of two percent by year-end.

After weeks of global instability and central banks favoring looser monetary policy, investors have increased their gold ETF holdings, which stood at 1,573 tonnes as of February 2 – a gain of 22 tonnes week-on-week and 92 tonnes month-on-month.

Keeping in mind the global economies, gold prices are expected to strengthen in the near-term, driven by improved spec and investor sentiment, but we do not expect prices to break above the $1,200 psychological level.

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 Performing Month for Gold since Jan 2015: RSBL"
http://riddisiddhibullionsltd.blogspot.in/2016/01/best-perofrming-month-for-gold-since.html 

BEST PERFORMING MONTH FOR GOLD SINCE JAN 2015: RSBL

By Mr. Prithviraj Kothari, MD, RSBL

Recent years have seen countless claims that gold and silver prices have to head far lower, implying demand is low or supply is high.  But the actual data continues to prove this false, showing precious-metals bearishness is rooted in sentiment and not fundamentals.

Currently market sentiments for the yellow metal are bullions over the month for January as the global equities routs and a growth discomfort spurred gold prices nearly five percent – the biggest monthly gain in a year.

Gold prices headed for their best monthly rise in a year on Friday, slipping back to $1110 per ounce as world stock markets gained, but trading 4.6% higher from the start of 2016. This was gold's best monthly gain in Dollar terms since January 2015.

This year where on one side we saw the global equity markets began with a major sell off the yellow metal has given its best signal months performance since January 2015- as it rose 4.9per cent this month. Gold had hit a 12-week high of $1,128.20 during US trading on Wednesday and has since eased on profit-taking.

The gold price inched higher during Asian trading hours on Thursday supported by market uncertainties, as well as expectations of slower future Fed rate hikes.

Gold edged higher on Friday after U.S. data showed economic growth decelerated sharply in the fourth quarter and the price of the precious metal was on track for its biggest monthly rise in a year after global economic headwinds hit riskier assets.


Data released was as follows:

• Fourth quarter advance GDP came in at 0.7 percent, missing the forecast of 0.8 percent. GDP Price Index stood at 0.8 percent versus the estimate of 1.2 percent.
• Revised University of Michigan Consumer Sentiment was at 92.0, below the projection of 93.1, while inflation expectations rose 2.5 percent.
• Employment Cost Index was in-line with projections at a 0.6 percent gain, while the Goods Trade Balance was at -61.5 billion, in range of the economic consensus of -60.0 billion.
• Core durable goods in December at -1.2 percent missed the estimate of -0.1 percent durable goods orders at -5.1 percent was sharply below the forecast -0.6 percent.
• US weekly unemployment claims at 278,000 were better than the forecast 281,000 and below the psychological 300,000 mark.

The gold rally is now battling a physical demand concern as Indian trade has lost pace and Chinese investors prepare for the aforementioned Chinese Lunar celebration.

This will further constrain the gains for gold as physical demand is likely to weaken.

While sentiment is improving across commodities the major concern now is where golf will re-bound of it will be carried along if long-term investors get favorable towards commodities.

Gold reached a 12-week high of $1,127.80 on Wednesday, after the Federal Reserve said it was closely watching the global economy and financial markets. This supported the view that U.S. policymakers may not be able to raise interest rates again as soon as March.

Currently the major deciding factor is the US tightening policy. Market players believe that even one further lifting of the fed funds target this year will come with great difficulty, and that the Fed’s own projected pace of four hikes this year is a near impossibility.

Maybe things won't be this bad next month in the wider markets, so it is possible that if ETF flows are subsiding, prices will be lower too.

But one positive lesson we can learn from this month is that gold does still have a safe-haven role and that could stand it in good stead through a testing year to come.


- Previous blog - "Markets remain calm as we enter 2016:RSBL"
http://riddisiddhibullionsltd.blogspot.in/2016/01/markets-remain-calm-as-we-enter-2016.html