LOTS OFTHINGS TO SMILE ABOUT FOR PRECIOUS METALS

                                                                                                      - By Mr. Prithviraj Kothari, MD, RSBL

Though we did see some trading in precious metals on Jan 1st and 2nd, it was the week from 5th-9th Jan that was actually considered the first volatile trading week of 2015.

The main news doing the rounds for the week was from US- minutes of the recent FOMC meeting and the non-farms payroll report.

Apart from the macro reports there were the following financial reports that were out in the week.

• US non-manufacturing PMI, factory orders and trade balance monthly reports.
• Europe, MPC rate
• The EU flash CPI
• Unemployment report,
• GB’s manufacturing PMI
• Germany retail sales
• The French trade balance.
• In China, CPI and trade balance
• And several economic reports from Canada and Australia.

But of all the above mentioned reports, the most influential for gold was the unemployment report.


Gold was seen to have a positive start for the week as it firmed above $1200 an ounce on Tuesday hitting a near three-week high, as tumbling global equities and concerns over Greece's future in the euro zone prompted investors to seek safety in the metal.

The uncertainty behind the euro zone is once again tempting investors to run after gold as a safe haven asset. This risk off sentiment in the markets may help bullion be stable at its recent upswing.

Adding to this we also saw that holding in the world’s largest gold-backed exchange traded fund- the SPDR Gold trust, rose 0.25 per cent to 710.81 tonnes on Monday, though still near a six-year low. But this rise did reflect improving investor sentiments towards gold.

Bullion traded in a ranged manner for most part of the week while volatility was high on Friday. The Greenback jumped on likely positive economic reports from the US coming week whereas speculation increased that Fed might talk about raising interest rates as also anticipated from its monetary policy minutes report due next week and likely putting weight on Bullion.

We have always seen that precious metal markets and the equities markets are inversely related. This week too, we saw precious metals rising while equity market and commodity bellwethers including copper and oil hit fresh multi-year lows. After a disappointing end to 2014 gold is beginning to build a base above $1,200 an ounce – the metal advanced 1.2% to $1,223 an ounce in late trade Friday, the highest since December 11.

Gold's gains since hitting four-year lows early November now top 7% and is made more remarkable by the fact that the advance has come despite a rampant dollar which hit a 12-year high against major currencies yesterday and a Friday jobs report that confirmed that the US economic recovery remains on track.

Though the market players were a lot dependent on the non-farm payrolls report, it did not show much after effect on gold.

The gold price wobbled briefly but was ultimately unaffected by a non-farm payrolls report that, while mostly positive, was not potent enough to shift the Federal Reserve’s rate-rise timeline.

Total non-farm payroll employment rose by 252,000 in December, which beat the 241,000 forecast, while the unemployment rate declined to 5.6 percent, the US Bureau of Labor Statistics reported today.

Additionally, the change in total non-farm payroll employment for October was revised to 261,000 from 243,000 and the change for November was revised to 353,000 from 321,000.
The forthcoming labor reports are expected to create added significance as there are expectations that the Federal Reserve in on the verge of raising interest rates. The current market consensus is that rates will rise in mid-2015 although this is a moving target that will be dictated by jobs and inflation data.

As said earlier, too gold is one such commodity which takes price direction from macro developments rather than its own demand-supply wherein we feel downside risks for the commodity may stay in the near future



- Previous blog - "An Impressive start For Gold In 2015 But A Dull End"
http://riddisiddhibullionsltd.blogspot.in/2015/01/an-impressive-start-for-gold-in-2105.html

IS GOLD BEING COMPLETELY CONTROLLED BY THE DOLLAR?

by Mr. Prithviraj Kothari, MD, RSBL

Gold is being pressurised on multiple fronts-

• Equities
• U.S Dollar
• Chinese Demand for Gold
• European Union
• Japanese Bank

The equities markets is yet another reason that continues to pressurise gold. The stock market continues to look poised for another run higher into new high territory.  

Moreover investors have been more confident about the equities market as compared to gold and this has prolonged the ongoing lack of interest in gold and precious metals.

Apart from equities, The US dollar index too has been mounting pressure on gold. 

Dollar is at multi-year highs and does not appear headed for a reversal anytime soon. Ongoing deflationary pressures in the Euro zone along with economic struggles in Japan could potentially keep the greenback well-supported for some time. 

Gold has been dancing to the tunes of the U.S dollar and there is a big expectation that the U.S. economy will continue to grow and that will further boost the dollar. The notion of higher rates and economic strength is driving the dollar higher and gold lower. 

Surge in the dollar, in which gold is priced, has knocked the metal in recent days through key chart support at $1,180 an ounce -- the lowest level hit during last year's 28 percent plunge -- and $1,155 to its lowest since early 2010 at $1,137.40.

Initially $1150 was considered a good support level for gold but now that gold has crossed this level too,  technical analysts have said a test of the $1,000 level could be on the cards after a break of support at $1,155, a retracement level of its rally to record highs in 2011.

Moreover, robust demand for gold from China has been raising concerns amongst analysts and investors. It has been marked that China, the leading gold consumer of the world, usually buy lot of jewellery, bars and coins at dips. 

Chinese gold buyers, who in the past often took advantage of falling prices as a cheap way of buying into the yellow precious metal, are still biding their time. But this year demand from this country has also been low.

On Wednesday, gold touched the lowest since April 23, 2010. Gold sank about 2 percent on Wednesday to its lowest since mid-2010, potentially opening the way for a fall to $1,000 as a surging U.S. dollar weakened the investment case for non-yielding bullion.

Moreover,  the divergence between the U.S. and economies including the European Union and Japan is driving gains for the dollar. 

Gold futures fell, capping the longest slump since May 2013, as the dollar rally eroded the appeal of the precious metal as an alternative investment.

Gold prices ended the U.S. day session narrowly mixed Thursday and not far above this week’s 4.5-year lows. Trading was quieter ahead of Friday morning’s important U.S. jobs report.  Once the report was out and the key indicators were not as per expectations , precious metals rebounded. The spot gold price was last $8 higher at $1147.90/ $1,1468 an ounce in Thursdays close after spiking up to $15850 with the dollar last at 1.2374 against the euro.

The metal has lost around $100 an ounce over the past week, regenerating memories of a stunning two-day drop in 2013 that started a huge wave of divestment and an annual drop in gold prices after 12 consecutive years. 

Silver was down 3.6 percent at $15.43 , paring losses after hitting $15.13, its lowest since mid-2010.

On Thursday, spot gold prices gained after the US jobs data was out. Spot gold was $8 higher at $1147.90/1148.60 per ounce. The US jobs data stated that the US added just 214,000 jobs in October. This was down from 248,000 in September and also below the predicted 235,000. This gave some support to gold that been witnessing a tumble since quite some time now.

Next week brings more attention to euro zone and Chinese economic data, and the results may serve to underscore the monetary policy divergence between the U.S. and the rest of the world.

The would result in strengthening of the dollar thus further putting pressure on gold which would act completely opposite to gold price movements on Friday.

Moreover, several European countries will release their first third-quarter gross domestic product data, and China will release reports on industrial production growth, producer price index and export data.

Even as China Japan and the Euro zone shows that their economy has been growing as much slow pace and they need easy monetary policies, next week there will more outlook on policy divergence with the Federal Reserve needing to decide on the interest rate hike which many analysts believe wont come in March

While the longer-term trend remains down, gold will likely not go straight down. A short covering and/or relief rally will likely be soon in the coming weeks and gold could possibly test the breakdown level of $1183 before potentially heading lower again.

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 -

"Fed Sets The Rules For Gold"

http://riddisiddhibullionsltd.blogspot.in/2014/11/fed-sets-rules-for-gold.html

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A BOOSTER MONTH FOR GOLD?

by Mr. Prithviraj Kothari, MD, RSBL

Gold has established a support level at $1275 since March and prices have risen post this level. 

But, during the second half of March gold fell heavily from resistance around $1400 back down to a several week low near support at $1275.

As 2014 began, gold moved very well for the initial months towards a six month high near $1400 and has now plunged to levels closer to $1300.

As news of the escalating tensions in Middle East and Ukraine gained momentum, gold gained 5.4 per cent year due to rise in demand for this safe haven asset.

After hovering at around $1290 gold has plunged sharply over the last week and has broken through the support at $1275. 

It rallied a day ago however ran into further resistance at $1275 before falling lower to a four month low around $1258.  

Though gold has always been the markets favourite metal during uncertainties, but this time bullion investors continue to worry over strong U.S. economic data and its impact on the dollar.

This week we saw gold falling to its lowest level in three months, on Friday before it recovered modestly.

On Tuesday, Gold witnessed its greatest drop this week as the market broke through recent support at the $1,270 area.

Gold was  unable to capitalize on the news of the ECB’s interest rate cut and QE program as the euro weakness offset any support gold would have received from the new liquidity programs.

AS tensions lingered over Ukraine and a weak dollar forced bargain hunting, we saw gold prices rising on Wednesday after prices earlier fell to a two and a half month low.

The yellow metal was under pressure after the Russian President drew plans for a ceasefire but then regained its prices when the Ukraine prime minister later dismissed Russia's proposal.

The metal is under pressure as the euro languished near a 14-month low versus the dollar on Friday, struggling to regain its footing after the European Central Bank delivered a fresh round of stimulus and promised even more if needed.

Gold was standing firm above the $1270 level in Thursday as it was impacted by a weaker Euro and surging equities after the European Central Bank cut interest rates to record lows which was counteracted by lower than expected U.S. jobs data. 

The main refinancing rate was cut to 0.05 per cent from 0,,15 per cent and the ECB lowered the rate on bank overnight deposits to -0.20 percent. 

But what surprised the market was Fridays U.S. jobs data that gave gold a push thus helping it to return to modest levels overnight. 

The U.S. Labor Department said the economy created 142,000 jobs in August, far below expectations for a figure of over 200,000. The unemployment rate fell to 6.1%, a six-year low. The average pace of job creation this year is 215,000, up from 194,000 in 2014. 

Gold rose from an 11-week low, after U.S. employers added the fewest jobs this year, adding some pressure on the Federal Reserve to maintain lower interest rates.

Initially data reports had stated the US economy was back on the path of recovery but Fridays number were a bit disappointing .

A stronger greenback is a setback for dollar denominated gold as it makes the yellow metal more expensive for users of other currencies.

 Gold traders are likely to keep an eye on currency moves next week after the euro fell to a 14-month low versus the dollar Thursday, following the surprising move by the European Central Bank to cut interest rates and embark on a quantitative easing program.

Traders will also extend a warm welcome to the month of September as it has historically been the best performing month for gold giving an average return of 2.16 per cent since 1969.

A spike in retail demand in India is another reason for the typical bump.

We hope this month the be a booster for gold.

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 -

"Bull v/s Bear"

http://riddisiddhibullionsltd.blogspot.in/2014/08/bull-vs-bear.html

Geopolitical cover for GOLD!

                                                        - Mr. Prithviraj Kothari, MD, RSBL

Till 2012, gold was considered as the highest return generating asset in its class. From December 2008 - June 2011 bullion climbed 70 per cent as the Fed bought debt and held borrowing costs near zero percent to spur economic growth after the recession. Prices ended the 12-year bull run last year as inflation remained low and on concern that the U.S. central bank would slow the pace of monetary stimulus.

Lately gold has been abandoned by many as investors seem to be captivated by other assets like equities. The equity market continues to attract money as people expect that the economy will improve further.

Though gold has risen lately, many investors believe that this price rise won't last for long and any easing of the geopolitical tension would bring gold prices down. It was these tensions that gave gold the all needed boost at the beginning of the week. Gold prices jumped 6.1 percent for the month, while recording a gain of 3 percent for the quarter ended June.

Gold was up on Monday and climbed to a three-month high on Tuesday as a softer dollar and escalating violence in Iraq increased the metal's appeal, boosting inflows into the top bullion-backed fund. Spot gold climbed to $1,332.10 an ounce, its highest since March 24 during the trading hours.

Post the release of employment data, gold tumbled as the nonfarm payrolls data was much stronger than expected. This data was released on Thursday as Friday was a holiday. The U.S. Labor Department said the U.S. added 288,000 jobs in June, with the unemployment rate falling to almost a six-year low of 6.1%. The headline figure was sharply above the consensus estimate of slightly more than 200,000 new jobs, while the jobless rate fell 0.2 basis point from last month’s 6.3%.

In addition, the government upwardly revised the May job figure to 224,000 from 217,000 and April job gains to 304,000 from 282,000.Wage gains remained as expected, up 0.2%, and the labour-force participation rate was also flat at 62.8%. US jobs data released Thursday supplied evidence that the country's economy is growing, with the unemployment rate nearing a six-year low.

As U.S. markets were closed in recognition of Independence Day, investors will have to wait until after the holiday long weekend to determine the full impact of Thursday’s much better-than-expected nonfarm payrolls report.

On Friday, gold prices rose as they were reinforced by mixed European shares and tensions in Iraq and Ukraine. But data indicating that the US economy is strengthening may soon reduce demand for the precious metal.

The yellow metal has benefited from its traditional haven status in recent months. However, when geopolitical tensions ease, less-committed investors are sure to exit; and one can expect gold to return to its downward trajectory witnessed since April last year.

Moreover, demand from two of the worlds largest consumers of gold has dampened in the recent months with slowdown in Chinese imports as well as continuing lacklustre performance by India. Customs duty of 10 per cent ad valorem and export obligation (80:20 scheme) have discouraged gold imports into India.

Meanwhile, a Bloomberg report indicated gold shipments into India may have plunged 77 percent in the first half amid government restrictions such as higher taxes on bullion imports.

However Modi’s government has hinted that it will relax some of the restrictions. Loosening those restrictions could help to revive Indian gold demand and further push gold prices higher. The next big event on the domestic front is the First Budget of the new government to go live on 10th July, 2014.

Meanwhile we expect gold and silver to trade in the following prices range:

METAL	INTERNATIONAL	DOMESTIC - RSBL BENCHMARK PRICE
GOLD	$1291 - $1345  an ounce	INR 27,500 - INR 29,500  per 10 gm
SILVER	$20.20 - $22.00  an ounce	INR 43,000 - INR 47,500  per kg

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 - "Halfway through 2014...But where is gold heading for??"

http://www.riddisiddhibullionsltd.blogspot.in/2014/06/half-way-through-2014but-where-is-gold.html

HALF WAY THROUGH 2014...BUT WHERE IS GOLD HEADING FOR?

                                                     - Mr. Prithviraj Kothari, MD, RSBL              

We are half way through 2014 and the market is still confused whether gold is showing bullish trends or bearish. But lately, gold has been behaving in such a pattern that it would be difficult for anyone to give "a" particular market trend.


                                  

At the beginning of 2014 it was the exorbitant demand for gold from China that kept gold prices high. Then came in the deteriorating weather conditions in US and political uncertainty in the Euro Zone that kept pushing gold prices even higher. Come in March and the tables tuned for the yellow metal. Gold prices dropped over developing US economy and statement released by the Fed that they may end the massive bond buying program by the end of 2014. Then came in the Ukraine crisis which proved to be vital for gold. May was once again a bumpy ride for gold as it was pulled between the escalating tensions in Russia on one side and a positive US economy on the other.

Simmering geopolitical tensions over Ukraine and Iraq have boosted gold's safe-haven appeal so far this year. Still, analysts are bearish on gold's outlook because of possible dollar strength, an equities rally and tame inflation.

Last week gold posted its biggest weekly rise in three months as the threat of escalating tensions in Iraq and the Federal Reserve's lack of commitment to raising interest rates sparked a wave of short covering

The recent crisis occurring in Iraq has boosted gold prices. Sunni tribes have joined a militant takeover of northern Iraq. Oil prices were pushed to 9-month highs last week, with a consequent knock-on effect on gold.

For a better analysis of gold prices movements over the week, I have given gold's performance on a daily basis below.

MONDAY- Following previous weeks trends, this week too, gold began on a positive note due to weak US equities and increasing violence in Iraq. Gold was hovering around $1321.90. As Iran's supreme leader accused the United States on Sunday of trying to retake control of Iraq by exploiting sectarian rivalries and as Sunni insurgents drove toward Baghdad from new strongholds along the Syrian border, we saw gold extending last week's 3 per cent gains over these issues.

TUESDAY- Following suit, Gold hit a two-month high on Tuesday since mid-March as a drop in European shares after soft German economic data and a weaker dollar helped the metal build on last week's gains. Spot gold hit a peak of $1,325.70 and was up 0.5 percent at $1,323.80 an ounce during the trading sessions.

WEDNESDAY- Gold fell on Wednesday as physical buying dried up after prices jumped to their highest level in two months in the previous session. Gold dipped $3.31 an ounce to $1,314.29 after rising to $1,325.90 on Tuesday, its strongest since April 15. It has gained 9 percent so far this year.

THURSDAY- Gold fell on Thursday as upbeat U.S. jobless claims data and weaker crude oil prices sent prices below a two-month high hit earlier this week. Another report on Thursday showed the number of Americans seeking unemployment benefits fell again last week.

Gold's appeal as a hedge has definitely declined as the market is under a strong belief of an expanding economy. Recent gains in gold were mainly motivated by short covering as speculators aggressively bought back their bearish bets. Fed President James Bullard stated that the interest rates increases could happen soon. This further got gold prices under pressure. Also negative, was a drop in crude oil prices as fears eased over export disruption from war-ravaged Iraq.

FRIDAY- Friday too, gold prices declined. Nearly flat US equities and a slightly lower dollar failed to inspire gold, when data showed US consumer sentiment rose in June as consumers remained optimistic and the sluggish first quarter was due to difficult winter conditions.


Traders warned that bullion could see some additional choppy trading amid concerns over weak imports in top consumer China. Hong Kong released import/export statistics, which showed a drop of net Chinese Gold imports to 52.3 tons, which is the lowest number since January 2013. China's total gold imports from Hong Kong dropped 17 percent to 67.233 tonnes in May from 80.817 tonnes in April, according to data emailed to Reuters by the Hong Kong Census and Statistics Department.

There are several factors that could affect this number:

• The rising gold prices have dampened the demand for gold
• The ongoing talks about trade finance, where Gold was apparently used in the past to borrow cheaper currency
• A liquidation of Gold as collateral
• Direct Gold imports into China are said to be growing, as there is no Chinese official data released such imports would be difficult to track.

Moreover, India has witnessed a weak start to the monsoon. This may curb the domestic gold demand, as 70 per cent of the gold demand in India comes from the rural areas that are dependent on agriculture as its main source of income. The majority of Indian gold purchases are made in the agricultural sector, and a good harvest typically raises income levels and translates into greater bullion demand. We still await July and August and hope for better monsoons.

Meanwhile we expect gold and silver to trade in the following prices range:

METAL	INTERNATIONAL	DOMESTIC
GOLD	$1293 - $1340 an ounce	INR 28,000 - INR 29,500 per 10 gm
SILVER	$20.40 - $22.00 an ounce	INR 44,000 - INR 49,000 per kg

- Previous blog -
"Iraq to Ukraine- Safe Haven Boost"
http://www.riddisiddhibullionsltd.blogspot.in/2014/06/iraq-to-ukraine-safe-haven-boost.html

GOLD ON A SEE SAW

- By Mr. Prithviraj Kothari, MD, RSBL (RiddiSiddhi Bullions Ltd.)

The year began on a positive note for gold after a terribly weak performance in 2013. By 2014, Mid February gold was once again enjoying the status of the most sought after metal, as we saw the yellow metal moving on the road of recovery.

Now gold is being pulled between bullish and bearish factors. Gold prices peaked in march, but the pull back and consolidation is now lasting a bit too long to be considered healthy. Moreover, ETF redemptions are on the rise and this has given rise to the bearish pull for gold. Gold is now sitting on a see saw and is caught between US recovery on one side and the rising Geo-political tensions on the other.

Russian crisis brings along with it a strong bullish background for gold. But at the same time the global economic development, has shifted investors focus from gold to equities and pushed gold into the bear market. In addition, other markets are doing better and you need look no further than the fact that US equities are setting fresh record highs and corporate confidence seems to be picking up, as there has been a revival in M&A activity. Strong equities are therefore raising the opportunity cost of holding Gold.

Last year gold did disappoint many investors but still it has not been pushed out of the market. It's a temporary phase and key market players still believe that gold will soon begin to rally.

As such, we think the market could quickly get interested in Gold again if other markets start to correct, especially as Gold prices are much closer to their lows than highs. A relaxation in India’s import restrictions could be a bullish development, as could a pick-up in geopolitical tension. Nearly 70% reduction in Gold imports as compared to last year will surely please the new government with the reduction in CAD woes.

It's always stated that gold enjoys the status of a safe haven asset during times of uncertainty. Ukraine tensions have been behind much of gold's 7 percent rise this year. Pro-Moscow separatists in eastern Ukraine ignored a public call by Russian President Vladimir Putin to postpone a referendum on self-rule, declaring they would go ahead on Sunday with a vote that could lead to war. The decision, which contradicted the conciliatory tone set by Putin just a day earlier, caused consternation in the West, which fears the referendum will tear Ukraine apart. While on Saturday, tensions were running at fever pitch in eastern Ukraine on the eve of an independence referendum, as rebels briefly held several Red Cross staff on suspicion of espionage. These rebels voted for self rule. Ukraine's acting President Oleksander Turchinov sad that those stand for self rule do not understand that it would mean complete destruction of the economy , social programme and life in general for the majority of the population in these regions.

But, many traders fear the gains would dissipate quickly once the situation is resolved. Many gold analysts have said that the precious metal has remained resilient the past few weeks as fundamentals remain negative for the asset, such as the Fed's commitment to continue to scale back economic stimulus.

Data released on Thursday stated that the number of Americans filing new claims for unemployment benefits fell more than expected last week, indicating the labour market was strengthening despite a run-up in applications in prior weeks.

Overall, Gold posted second straight weekly decline as more strong U.S. data showed that the world's largest economy was recovering well, supportive of the Federal Reserve's stance to keep trimming monetary stimulus. Moreover, the European Central Bank stayed committed over leaving its main interest rates unchanged. Physical demand has also been muted despite the drop in prices, with many hoping that a stabilization in prices would bring back buyers.

Last year, Chinese demand for gold surged as many buyers entered the market at dips. That, along with strength in retail demand in Western markets, helped drive a 35 percent surge in physical investment last year to 47.1 million ounces and Jewellery consumption also rose 22 percent to 81.7 million ounces.

The Fed’s ongoing reduction in its bond purchases, easing concerns about fiscal situations on both sides of the Atlantic and low inflation are all headwinds for the yellow metal for the rest of 2014. This brief detention underscored jitters in the two regions of east Ukraine ahead of the disputed referendum likely to result in a new spike of Geo-political tensions.

We cannot then, underestimate gold. 

The trade range for Gold and Silver is expected to be as follows:

In the international markets gold and silver are expected to range between $1270 -$1310 and $18.20 - $20.50 respectively. While in the SPOT (delivery based) domestic markets Gold and Silver are expected in the range of INR 28,300 to 29,700 and INR 40,500 - INR 44,000 respectively

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 -

"Ukraine Reigns Over Gold Prices"

http://riddisiddhibullionsltd.blogspot.in/2014/05/ukraine-reigns-over-gold-prices.html

Gold Gains Momentum, Investors Gain Confidence!

- By Mr. Prithviraj Kothari, MD, RSBL

While gold gained momentum, investors gained confidence in gold. Gold spurred the longest price rally in six months. Initially gold was on low, but prices got pushed higher by the end of the week.

On Monday, gold fell to nearly a three week low as we witnessed outflows from the worlds biggest bullion backed Exchange Traded Fund (ETF). Moreover, a lack of a further increase in geopolitical tension also prompted selling in gold. Last week, the fund's outflows totalled 9.3 tonnes, erasing all the gains made in the year.  

Gold fell to its lowest since mid-February on Tuesday after U.S. housing data beat expectations, boosting confidence in the U.S. economic recovery and lifting stock markets, which hurt gold's appeal as an alternative investment. 

On Wednesday, gold had firmed its position above a two and a half month low of $1,268.24 due to firmer equities and a weaker technical picture that had triggered strong selling,

However, the tables turned on Thursday as rising geopolitical tensions and options related buying helped gold in moving in the opposite direction and reverse the early sharp losses

Bullion prices mounted after Ukrainian forces killed up to five pro-Moscow rebels as they closed in on the separatists' military stronghold in the east. 

In March, bullion Prices reached a 6 month high after Russia took over Crimea. But then it fell almost 9 percent on signs that peace would return. But once again Hostilities this week are bringing back the gold bulls. Tensions between Moscow and Western powers over Ukraine are lending gold support, but it remains in a somewhat fragile situation as interest from long-term investors is still absent.

Though on the basis of the economic indicators of the US economy, there were signs of recovery, the conflict between Russia and Ukraine spurred traders to unwind bets on a drop. The metal has risen 8.2 percent in 2014 even though economic recovery has pushed the Federal Reserve to reduce its monetary easing. This tapering was responsible behind the 28 per cent drop in gold in 2013 because if the Fed would scale back its bond purchase then gold would lose its appeal of being an inflation hedge tool.

Apart from the Ukraine crisis, another big news that made rounds in the market was that major international banks were jettisoning their commodities business.*

Around 20 US based investors have filed antitrust claims against major leading banks over the past two months.  These investors have accused Barclay, Deutsche Bank, HSBC, Bank of Nova Scotia and Societe Generale of colluding to manipulate the gold price.

The court cases are complicating negotiations that Deutsche Bank had started with potential buyers after it announced in January that it was putting its seat at the fix up for sale, a source with knowledge of the matter said. In case any such decision is taking of discontinuing the commodity trading wings business then this will definitely calm down the price volatility of bullion prices.

Another fact the will play a major role in determining the gold prices is the worldwide demand from gold. CHINA- Chinese demand for gold is set to increase from the current level of 1,132 tonnes a year to 1,350 by 2017, cementing its place as the world’s largest gold market. According to report published by the World Gold Council, entitled:  ‘China’s gold market: progress and prospects’, private demand for gold in China will see sustained growth over the next four years.

China does not report any trade numbers. The only source of procuring these gold export numbers to China is through Hong Kong as its the prime medium of gold for China. But now that China has allowed Gold imports via Beijing, it may threaten Hong Kong’s export numbers to mainland.

INDIA- Physical demand in India over the next week is expected to rise as the country welcomes the auspicious occasion of Akshaya Tritiya on may 2. This could result in a slight pickup in gold demand , but with the heavy tariffs placed on gold, there are questions on how much buying will actually occur.

UK- Demand for gold from UK is tend to augment as investors are saving up for retirement with the U.K.’s Financial Conduct Authority considering adding bullion to its list of “standard assets. Last year, the FCA was replaced by The Financial Services Authority to oversee market regulation. They published a consultation paper with the list in 2012, asking whether other types of investment should be added. Various forms like Cash, bonds and exchange-traded commodities were included but  physical gold was not. There are expectations that gold may be added to the list by June. If any such possibility materializes then demand for gold from UK will definitely rise as gold is on the radar of more mainstream investors. 

Next week is full of revelation for gold as the market moving and price deterring event will unwrap for gold. With a Federal Reserve monetary policy meeting and April non-farm payrolls data set for release; additionally, any change in the standoff between Russia and Ukraine has the ability to move markets.

Moreover, The Federal Open Market Committee meets Tuesday and Wednesday, and economists said they expect the Fed to announce another $10 billion-a-month cut in its quantitative easing program, and on Friday the Labor Department is scheduled to release its April non-farm payrolls data.

Gold traders will have to be nimble next week as these headline-making events could cause volatile market action. Because of the uncertainty over the Ukraine situation, several gold-market players believe that gold prices will once again move upwards.

*source- http://in.reuters.com/

- Previous blog - "Gold Prices Off Route"

http://www.riddisiddhibullionsltd.blogspot.in/2014/04/gold-prices-of-route.html

LOTS OF IF's AND BUT's FOR GOLD

-by Mr. Prithviraj Kothari,MD,RSBL

Last year it was Syria...This year it’s Ukraine. Geopolitical tensions have always been a booster for gold and other precious metals and it has helped gold in enjoying its safe haven appeal as it always does in times of economic turmoil recession, inflation etc.

This week gold remained on the top and showed some interesting record movements too.

Gold prices bounced on Friday during the trading hours, rising 3.3 per cent from last week's close at 1385$ per ounce, a level not witnessed since early September. Gold sailed through US$1,380 and was on course for a sixth successive week of gains as the situation in Ukraine showed no signs of easing.

Apart from the Ukraine Crisis deceleration of Chinese economic growth has dampened the investors risk appetites. Retail Sales and Industrial output figures were out this week and it has been quite disappointing. According to MNI, a Chinese Government source said not to panic if 1Q GDP would be below target. This once again raised the question that the all so hyped China and its economy and its hunger for gold was just a temporary thing? Well we need to wait and watch

This uncertainty surrounding the rising economies has to an extent eroded investors confidence. The catalyst for a shift in risk sentiment remains to be seen as the market shrugged off positive US data overnight, suggesting the potential for a lacklustre reaction to upcoming Consumer Confidence figures.

Gold continues to be well supported as Russia is seemingly un-phased by the prospect of sanctions from the West. The population in the Crimea province votes this weekend on whether to secede from the Ukraine, with the way the ballot has been set out seemingly certain to guarantee that is the outcome say observers. It is likely to be followed by the US and its allies imposing sanctions on Russia on Monday, potentially starting a round of tit-for-tat retaliation with serious implications for financial markets and the US dollar.

The last time gold had such a gold run was in July/August 2011, soon after which the metal started its climb to the all-time record high of $1,921 per troy ounce.

Looking at the week ahead, if emerging markets fears abate and US data continues to improve; traders may ease out of safe-haven plays like US Treasuries. The resulting rise in yields would likely help the greenback to recover some lost ground, which in turn would weigh on gold prices. 

If situation in Ukraine results in unrest or rioting, gold prices would breach $1,400. But if the Ukrainian situation either resolves itself in the coming days or stabilizes to the current standoff and does not further escalate gold could sell off quickly — returning towards $1,300 an ounce. 

Lots of ifs and buts for the Gold next move! But one thing is clear, safe haven appeal of Gold will always be there.

For the week gold is expected to range between $1364-$1420 an ounce in the international market and Rs.29,500-Rs.31,500 per 10 gram in the domestic market.

On the other hand, silver is expected to range between $20.55-$22.00 and Rs.45,000-Rs.48,00 in the international and domestic markets respectively.

The primary purpose of this blog (Prithviraj Kothari's view on Bullion Markets- MD,RSBL (Riddisiddhi Bullions Ltd.)) is to educate the masses of the current happenings in the Bullion world.

- Previous blog -

"Gold Trapped?"

http://www.riddisiddhibullionsltd.blogspot.in/2014/03/gold-trapped.html

LET'S GET GOLD !!

-By Mr. Prithviraj Kothari, MD, RSBL (RiddiSiddhi Bullions Ltd.)

Look in to the past- it was Feb 2013....Look in to the present- it is Feb 2014- Gold has risen 11 % since the beginning of the year....

Gold has shown some remarkable performances Since Jan-

1) Gold is up over 10 per cent since the 2013 closing lows

2)Gold crossed the $1300 mark for first time in over a year

3) The $1300 mark cross over has made gold reach a three month high in the week

4) this three month high posted its biggest weekly gains since October 2013.

Just "a" particular cause cannot be held responsible for this-

- Weak US economic data

- Deteriorating weather conditions in the US

- Political uncertainty in the Euro Zone

- SDPR posting its biggest inflow since December 2013

- Rising demand for gold from China

All of the above mentioned reasons are somewhere, directly or indirectly responsible for the rally in gold prices.

By the end of the week gold received a good booster by the weak US economic data release. The report shows that U.S. retail sales fell unpredictably in January. U.S*retail sales fell 0.4% in January*

Adding to it, more Americans filed for jobless benefits last week. Initial weekly jobless claims rose by 8,000 to 339,000, missing forecasts for a decline to 330,000.

The ICE dollar index, which tracks the greenback against six other currencies,declined to 80.308 from 80.718 late Wednesday. 

In all, the entire scenario gave a good push to gold prices. This weak economic development has once again raised questions over whether the world's biggest economy can sustain growth and made some investors hope the Fed would take a slower approach to tapering its bond purchases.

The disappointing U.S retail sales data weighed on the dollar, increasing the appeal for bullion, prices of which were sustained by the weak data releases from US as it reinforced the investors that Fed will take a slower approach to tapering its bond purchases.

Furthermore, extremely cold and unfavourable and unseasonable snowy conditions in US have hit the retails sales which has always been considered as a parameter to determine consumer spending. deteriorating conditions have also been a reason for a drop in sales.

Large parts of the United States have been gripped by freezing temperatures and snow storms, which caused investors to largely discount both the day's and other recent weak data that suggested the economy started the year on weaker footing.

shares in Europe dipped, as Italy was affected by the prevailing uncertainty  that raised worries about efforts to turn around Italy's sputtering economy.

However hopes once again prevailed as the way was left open for center left leader Matteo Renzi to take over, once Italian Prime Minister Enrico Letta would tender his resignation.

Additionally, SPDR- world's largest gold backed exchange traded fund, posted its biggest inflow since late December 2013. Holdings rose 7.50 tonnes to 806.35 tonnes on Thursday,

 This further strengthened investors sentiments.

While in China, consumer demand has always been rising and it has now overtaken India as the largest bullion consumer as it topped 1000 tonnes for the first time in 2013.

In the physical markets, bullion was also underpinned after India's trade ministry said it has recommended easing curbs on gold imports, after a 77 percent drop in imports for January that helped narrow the country's trade deficit.

During times of economic turmoil, gold has always enjoyed the status of a safe haven asset and has always had an inverse relation with equities.

But an interesting fact to be noted was that as gold performed well, equities too were on a rise.

Indeed the recovery in the gold price has coincided with a 0.5-percentage-point increase in the U.S. equity risk premium and a decline in U.S. real yields. This has been a favourable atmosphere for gold prices to rise.

Other precious metals are on the rise with Palladium up for the 8th day in a row (the longest streak since July), Platinum up 6 days in a row (long since July) and Silver up 10 days in a row breaking $20.50.

Gold’s gains in 2014 have been helped by soft U.S. economic data and emerging-market stress, but the metal’s strength may not last once economic data improve again.

The underlying notion that central banks are slowing down their quantitative easing is boosting gold's appeal as an inflation hedge and alternative currency. 

    

Speculation that the Fed might hold off further reduction of stimulus had strongly supported gold by keeping interest rates at rock bottom while stoking inflation fears. 

There is no surety of how well and for how long will these gold prices be sustained. A we head towards March, weather conditions in US tend to improve and can once again boos consumer spending. the rapid rebound in the S&P 500 over the past week would suggest that the sources of support for the gold price from a rising equity risk premium may be coming to an end. 

Now we wait for March or rather lets march towards March !!

The primary purpose of this blog (Prithviraj Kothari's view on Bullion Markets- MD,RSBL (Riddisiddhi Bullions Ltd.)) is to educate the masses of the current happenings in the Bullion world.

- Previous blog -  "Is the golden egg about to hatch??"

http://riddisiddhibullionsltd.blogspot.in/2014/02/is-golden-egg-about-to-hatch.html