Tag Archives: gold news

Cheap Gold and Silver prices – the deal of a lifetime?

20 Jul

Eerily, perhaps the worst precious metals market sentiment currently exists that has been observed since the early 1970’s.

mcx gold silverThe gold and silver markets have fallen dramatically in the wake of the FOMC signaling an end to its controversial Quantitative Easing or QE programs. The pricing in of such FedspeakQE taper-talk has also triggered a yield spike in southern Europe that could deepen that region’s existing debt crisis.

Furthermore, sharply rising interest rates have resulted as billions of investors exit perhaps the largest financial bubble ever seen. The end of cheap real estate refinance has finally arrived as mortgage rates are now approaching five percent.

Rising government bond rates mean more money that will increase the chances of stealth inflation. The Fed acting to crush the effects of inflation may even lead to more money printing.

Other background factors

In addition, rising oil prices have been cutting in to already lofty equity valuations, as fallout from the “Black Swan” in the Gulf of Mexico expands. Gasoline prices are already rising.

The public has also been caught largely off guard by embroiling social unrest in various parts of the world. This dissatisfaction is indirectly the result of exporting inflation that is collateral damage from currency depreciation wars.

A dead precious metals mining sector has been cutting off any “perceptual” idea of supply as paper metal prices are now well below the cost of production. New supply matters little for gold. For silver, by the time the sector catches up with demand, there will be no silver left.

Precious metal prices suffer despite bullish fundamentals

Offset by an unprecedented and record breaking surge in physical demand for silver, from silver coins to international demand. Yet, eerily, perhaps the worst precious metals market sentiment currently exists that has been observed since the early 1970’s.

Bullion banks are currently long buyers by every indication, yet they are still maintaining a concentrated short position in the futures market. This could be an intentional effort to suppress physical metal prices by selling paper so that they can accumulate real metal more cheaply.

In short, it is unfathomable how low the precious metals markets are by any measure. Technically, the market could still go lower, but does this change the likelihood that investors have now been presented with what seems to be the precious metal buying opportunity of perhaps multiple lifetimes?

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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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Gold inches up as Fed officials downplay stimulus wind-down

25 Jun

Spot gold rose 0.2 percent to $1,283.55 an ounce by 0018 GMT. It fell around 1 percent on Monday

Gold edged higher on Tuesday as the dollar weakened after two top Federal Reserve officials downplayed an imminent end to monetary stimulus.

Bullion is still down more than 7 percent since the start of last week due to worries over an early end to the Fed’s USD 85 billion monthly bond purchases and a cash crunch in China.

 Fundamentals

* Spot gold rose 0.2 percent to USD 1,283.55 an ounce by 0018 GMT. It fell around 1 percent on Monday, extending last week’s 7 percent slide as fears of a cash crunch in China spooked investors, and a slide in US equities prompted bullion selling to cover margin calls.

* Comex gold rose USD 6 to $1,283.10.

* Last Wednesday, Federal Reserve Chairman Ben Bernanke gave his most explicit signal yet that the US central bank was considering scaling back its USD 85 billion per month of Treasuries and mortgage-backed debt purchases.

* On Monday, Minneapolis Fed President Narayana Kocherlakota said investors were wrong to view the central bank as having become more keen to tighten policy than it was before last week’s policy meeting.

* Dallas Fed President Richard Fisher said even if the bank dialled back stimulus this year, it will still be running an accommodative policy.

* Fears of a credit crunch in China’s banking system eased on Monday as short-term interest rates fell. The central bank said there were sufficient funds in the market but banks needed to improve cash management and control lending.

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*India’s biggest jewellers’ association has asked its members to stop selling gold bars and coins, about 35 percent of their business, adding to government efforts to cut gold imports and stem a swelling current account deficit.

* HSBC lowered its 2013 gold price forecast to USD 1,396 from USD 1,542 an ounce and its 2014 price to USD 1,435 from USD 1,600, mainly on the Fed’s plans to reduce economic stimulus and weak Chinese growth prospects.

* SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, said its holdings fell 0.43 percent to 985.73 tonnes on Monday – its lowest in over four years.

India mines miniscule 120 kg Gold in April 2013; yet proves Chidambaram wrong!

14 Jun

“India does not produce an ounce of gold. You pay in rupee, but the government has to spend dollars to buy gold,” Chidambaram said  yesterday.

India has produced 120 kilogram of gold in April this month in sharp contrast to its hundreds of tons in imports. This should also be read in the background of Indian Finance Minsiter’s yesterday’s statement on India’s production and consumption of gold.

“India does not produce an ounce of gold. You pay in rupee, but the government has to spend dollars to buy gold,” Chidambaram said. “I do not buy gold. To think that gold is the safest investment is wrong,” the finance minister said and was quoted by the Times of India as saying.

At least India does produce much more than an ounce of gold!

The index of mineral production of mining and quarrying sector in April 2013 was lower by 16.9% compared to that of the preceding month. The mineral sector has shown a negative growth of 3.1% during April 2013 as compared to that of the corresponding month of previous year.

The total value of mineral production (excluding atomic & minor minerals) in the country during April 2013 was Rs. 17772 crore. The contribution of coal was the highest at Rs. 5673 crore (32%). Next in the order of importance were: petroleum (crude) Rs. 5671 crore, iron ore Rs. 2712 crore, natural gas (utilized) Rs. 1883 crore, lignite Rs. 490 crore and limestone Rs. 382 crore. These six minerals together contributed about 95% of the total value of mineral production in April 2013.

Production level of important minerals in April 2013 were: coal 435 lakh tonnes, lignite 39 lakh tonnes, natural gas (utilized) 2942 million cu. m., petroleum (crude) 31 lakh tonnes, bauxite 2035 thousand tonnes, chromite 242 thousand tonnes, copper conc. 10 thousand tonnes, iron ore 119 lakh tonnes, lead conc. 16 thousand tonnes, manganese ore 194 thousand tonnes, zinc conc. 124 thousand tonnes, apatite & phosphorite 198 thousand tonnes, dolomite 520 thousand tonnes, limestone 242 lakh tonnes, magnesite 16 thousand tonnes and diamond 2928 carat.

In April 2013 the output of apatite & phosphorite increased by 33.6%, bauxite 14.7% and iron ore 1.3% percent. However the production of petroleum (crude) decreased by 3.7%, natural gas (utilized) 5.5%, limestone 5.9%, lead conc. 8.9%, gold 11.1%, dolomite 15.0%, manganese ore 18.1%, copper conc. 18.6%, magnesite 20.3%, zinc conc. 23.0%, lignite 27.9%, chromite 30.3%, coal 33.0% and diamond 33.6 percent.

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