Tag Archives: gold futures

Perpetual volatility: Will investors abandon Gold?

24 Jul

mcx gold tradingGold futures are weighing and responding in earnest to the Ben Bernanke Congressional testimony of the last week. While the futures look comfortable in dealing with the anticipation that the Fed would not taper as soon as the markets had thought, lending it some buying appetite, the prospect of a tapering lingers with an uneasy calm.

“There’s still a bit of a thirst for the metal,” Jonathan Barratt, chief executive officer of Barratt’s Bulletin said to Bloomberg.

“Given that Bernanke has already suggested that tapering will only occur when they’re very comfortable with the economic outlook, we’re going to see tapering on the agenda but it’s going to be some time before it actually starts,” he added.

Gold on the Comex for delivery on August 13 was seen trading at $1,338.85/oz, a gain of $4.15 or 0.31% as of 10.05 AM IST.

The multi-billion Dollar question used to be this: When will the US Federal Reserve start to taper? After a series of testimonies this year, the answer looks very much elusive. The Fed could not be blamed on this, because they are doing what that is mandated out of them.

The Fed do own the trigger of shooting the Quantitative Easing measures point-blank. Only thing is that they cannot pull it at their will. In fact, having started this whirlpool of money printing, a genie is out, which is refusing to go into the bottle.

The markets have in effect become QE fetish to such an extent that it would be difficult to pull the trigger on QE execution. Playing to the gallery is imperative in a politicized economy.

Now, the mult-billion Dollar question is if the QE measures would be tapered at all? High profile leadership at PIMCO, world’s biggest institution investing in bond markets, believe that the ultra-loose monetary policy may continue until it is 2016.

That is no walking distance from 2013!

The fact remains that gold futures would see extended periods of volatility as data releases occur every time. The Fed has clubbed the QE measures to a recovery in job markets, housing markets and a moderate and healthy inflation. Each data release in this category, fluctuating as each one is, would take the futures on a roller coaster ride.

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Any negative sign is taken for a point to rally up and any positive sign on economy could be interpreted as a point to rally down in gold. Now imagine that happening all the way to 2016! That is a perfect incentive for investors to abandon gold. Especially when there are other less volatile instruments to conduct trade and make money.

But, at some point in time, all these QE measures would have to be curtailed. That would be the time when markets would see the perfect storm.

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Hours before the Minutes, Gold flat

10 Jul

Perpetual gold bulls liken Ben Bernanke, the US Federal Reserve Chairman, to one who delivered the bull market in gold with one hand and grabbed it back with the other; 2011 had seen gold futures rallying all the way to $1900 levels on QE steroids only to dip below the $1200 levels very recently.

Gold updates

Past two days had seen a slight uptrend in gold, marked by buying at lower levels and some short covering. However, hours before US Federal Reserve is about to come out with the minutes of the Federal Open Market Committee meet, which held in June, the futures are trading flat.

FOMC meeting minutes are scheduled to be released by 11.30 PM IST. This would be followed by a speech of Ben Bernanke sometime around 1.40 AM IST, Thursday.

Gold on the Globex platform of Comex for delivery on August 13 was seen trading at $1,245.05/oz, a loss of $0.85 or 0.07% as of 11.04 AM IST. Gold on India’s MCX for delivery on August 05 was seen trading at Rs.26008, almost flat.

It looks to be a wait-and-watch mode as far as gold investors are concerned.

Perpetual gold bulls liken Ben Bernanke, the US Federal Reserve Chairman, to one who delivered the bull market in gold with one hand and grabbed it back with the other; 2011 had seen gold futures rallying all the way to $1900 levels on QE steroids only to dip below the $1200 levels very recently.

The QE measures or Quantitative Easing measures—bond buying by Federal Reserve—had made gold rally to insane levels, and when June 2013 saw Bernanke announcing tapering of the measures provided the job market recovers, sent gold to a nadir.

It is the FOMC that takes a collective decision on whether or not to continue with the QE measures. It is worthwhile to note that positive job data that came in recently has taken the glitters off the eyes of QE advocates.

“The U.S. dollar is still rallying and Treasury yields are still trying to find a top. It’s still a pretty negative environment for gold.” said Victor Thianpiriya, an analyst at Australia & New Zealand Banking Group Ltd. in Singapore to Bloomberg News.

Besides, the rout in the currencies of emerging markets has added to Dollar strength.

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Gold Falls as Dollar Jumps to Three-Year High on U.S. Jobs Data

6 Jul

gold-updatesGold futures fell to a one-week low as the dollar surged to the highest in almost three years after U.S. payrolls rose more than forecast in June, fueling speculation that the Federal Reserve will scale back stimulus.

The greenback climbed as much as 1.6 percent against a basket of major currencies, eroding the appeal of gold as an alternative investment. Payrolls rose by 195,000 workers for a second straight month, the government said today. The median forecast in a Bloomberg survey projected a 165,000 gain. Standard & Poor’s 500 Index futures jumped after the jobs data.

“A better jobs report means there’s less flight to safety,” Brian Booth, a senior market strategist at Long Leaf Trading Group in Chicago, said in a telephone interview. “The initial reaction to the report was a push higher in the dollar and a rise in stocks, and for as long as that continues, gold will struggle.”

Gold futures for August delivery slumped 3.1 percent to settle at $1,212.70 an ounce at 1:46 p.m. on the Comex in New York. Earlier, the price touched $1,206.90, the lowest for a most-active contract since June 28. Trading was 25 percent above the 100-day average for this time, according to data compiled by Bloomberg.

Yesterday, the Comex floor was closed for the Independence Day holiday, and spot gold dropped 0.2 percent. Today, the Dollar Index, a gauge against six currencies, rose to the highest since July 13, 2010.

Silver futures for September delivery tumbled 4.9 percent to $18.736 an ounce on the Comex, the biggest decline since June 20. The metal has dropped 38 percent this year, the most among the 24 raw materials in the Standard & Poor’s GSCI Spot Index.

On the New York Mercantile Exchange, platinum futures for October delivery retreated 1.5 percent to $1,326.40 an ounce, the third straight loss. Palladium futures for September delivery slid 1.2 percent to $677.55 an ounce.

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Charts Show Gold Sell-off Could Get A Lot Uglier

5 Jul

If the yellow metal slides below a key support level of USD 1,150, the selloff could accelerate to USD 1,030 or even USD 870 an ounce – levels not seen since 2008 during the global financial crisis, Victor Thianpiriya, commodity strategist, Asia at ANZ wrote.

mcx goldFrom a technical perspective, the outlook for gold  is looking increasingly bearish, according to analysis by Australia New Zealand Bank (ANZ) , which says the recent sharp declines open the risk of much sharper corrections.

If the yellow metal slides below a key support level of USD 1,150, the selloff could accelerate to USD 1,030 or even USD 870 an ounce – levels not seen since 2008 during the global financial crisis, Victor Thianpiriya, commodity strategist, Asia at ANZ wrote.

“Closing near the lows of the month [June] underscores the risk of much deeper corrective declines… Caution is therefore, key,” Thianpiriya said.

“Volatility remains high. At times like this, the market can ignore fundamentals, and the technical picture takes on greater importance,” he added.

Last week, gold fell to its lowest level since 2010 at USD 1,180, with losses in the precious metal amounting to 22 percent since the start of the aggressive selloff in mid-April.

The yellow metal posted its worst quarterly performance on record, down 23 percent over the April-June period.

Relentless selling by exchange traded funds (ETFs) has been behind the poor performance of the precious metal in the recent months, outweighing physical demand for jewelry, bars and coins.

Thianpiriya noted that a close above USD 1,272 could turn the negative bias in gold around, and allow for a period of rebounds.

However, some strategists believe gold has entered a long term bear market, pointing a tapering of the Federal Reserve`s unprecedented monetary stimulus alongside a benign global inflationary environment as major headwinds for the metal.

Many banks have slashed their forecasts for gold in the recent weeks, the most recent being HSBC, which predicts that the average gold price will be USD 1,396 in 2013, down from USD 1,542.

Among the most bearish, however, is UBS , which warns that gold is at risk of becoming “obsolete” as the Fed winds down its stimulus program . It believes prices could fall to USD 1,150 in the coming 3 months.

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– By CNBC`s Ansuya Harjani
Copyright 2011 cnbc.com

Gold Inches up After Fed Officials’ Comments on Stimulus

3 Jul

Gold edged higher on Wednesday after a near 1 percent fall in the previous session, as two Federal Reserve officials said the U.S. central bank was likely to continue supporting the economy through asset purchases for some time.

GoldGold edged higher on Wednesday after a near 1 percent fall in the previous session, as two Federal Reserve officials said the US central bank was likely to continue supporting the economy through asset purchases for some time.

FUNDAMENTALS

* Spot gold rose 0.2 percent to USD 1,244.06 an ounce by 0014 GMT, while US gold was little changed at USD 1,243.5. Spot gold fell 0.9 percent on Tuesday as the dollar strengthened.

* Bullion, typically seen as a hedge against inflation, has taken a beating since Fed Chairman Ben Bernanke said last month the economy was recovering strongly enough for the central bank to begin tapering its stimulus in the next few months, and possibly end the programme in mid-2014.

* Gold posted its biggest ever quarterly loss of 23 percent for the April-June period, but began the third quarter on a positive note.

* Investors are awaiting US data this week to determine the strength of the economy and the exact timing of the Fed tapering.

* The Fed’s easy monetary policy will likely be warranted for “quite some time” as the US central bank drives down high unemployment while nudging low inflation back toward target, Fed Board Governor Jerome Powell said on Tuesday.

* The head of the Federal Reserve Bank of New York on Tuesday reiterated that the US central bank will likely continue to support the economic recovery for some time to come despite market worries that it was soon pulling back.

* SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, said its holdings fell 0.37 percent to 964.69 tonnes on Tuesday.

* Gold traders in India, the world’s biggest buyer of the metal, stayed on the sidelines on Tuesday, and premiums continued to get support from lower supplies due to restrictions by the central bank.

* For the top stories on metals and other news, click, or

MARKET NEWS

* The US dollar hit its highest in a month against the yen and euro on Tuesday while a gauge of global equities fell as US stocks reversed course to end slightly lower.

 

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Gold edges up, headed for worst week in a month

17 May

Gold edged up on Friday as stock markets paused after rally, but the metal was still on track for its worst weekly decline in a month as investors cut exposure to bullion, sending holdings in exchange-traded funds to the lowest in four years.

FUNDAMENTALS

Spot gold was up 0.17 percent to USD 1,388.11 an ounce by 0038 GMT, having fallen to a four-week low of USD 1,369.29 on Thursday as renewed liquidation in gold ETFs and the recent drop below the USD 1,400-per-ounce level spooked investors.

US gold for June delivery was little changed at USD 1,386.70.

SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, said its holdings fell 0.55 percent to 1041.42 tonnes on Thursday – the lowest in four years.

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Premiums for gold bars rallied to all-time highs in Hong Kong and Singapore on Thursday after bullion’s steepest drop since its April sell-off fuelled another round of buying that constricted supply.

Gold investment nearly halved in the first quarter as a brighter view of the US economy prompted investors in the West to favour other assets, but Chinese coin and bar demand hit a quarterly record of 109.5 tonnes, the World Gold Council said on Thursday.

Indian gold futures fell 1.5 percent on Thursday, extending losses for a second straight session, to hit their lowest level in nearly a month in line with global markets.

The Shanghai Gold Exchange (SGE) will launch after-hours trading for Fridays on May 31 as part of its efforts to help its members better manage price risks, the bourse said in a statement on Thursday.

MARKET NEWS

The Nikkei share average fell for a second day on Friday as caution over the recent steep rises continued to spur profit-taking, while a pullback in Wall Street soured investor sentiment.

Global equity markets fell on Thursday after a regional president of the Federal Reserve said the US central bank could begin to ease up on its loose monetary policy this summer, leading the dollar to recover against the euro.

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Gold hovers near 19-month low; bargain buying on

17 Apr

Indian gold futures edged lower on Wednesday, near their lowest level in more than 19 months, on losses in the global markets and a stronger rupee, triggering bargain buying among physical traders.

The actively traded gold contract for June delivery on the Multi Commodity Exchange (MCX) was 181 rupees lower at 25,585 rupees per 10 grams.

US gold for June delivery was 0.37 percent lower at $1,382.2 an ounce. The rupee, which firmed in trade on Wednesday, plays an important role in determining the landed cost of the dollar-quoted yellow metal.

“There are many buyers after consolidation in prices … sales will rise for Akshaya Tritiya,” said SK Jain, vice-president of All India Sarafa Association.

India, the world’s biggest buyer of the yellow metal, will celebrate Akshaya Tritiya, a key gold buying festival, next month. The wedding season has also begun and will continue till early June.

India has been trying to curb imports to put a lid on the record-high current account deficit. The federal government raised the import duty on gold, which it called a dead investment, by 50 percent to 6 percent in January.

On April 2, Finance Minister P. Chidambaram suggested the government was unlikely to raise the import tax on gold further to avoid gold smuggling.

May silver was 592 rupees lower at Rs 42,603 per kilogram.

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Source: http://www.moneycontrol.com/news/commodities/gold-hovers-near-19-month-low-bargain-buying-on_854157.html