Tag Archives: Mcx gold tips

Gold inches up, headed for third weekly gain

26 Jul

Gold edged up on Friday and was headed for its third straight weekly gain, helped by a weaker dollar and hopes of a prolonged period of easy monetary policy.

FUNDAMENTALS

* Spot gold had climbed 0.07 percent to USD1,333.95 an ounce by 0014 GMT, after gaining about 1 percent in the previous session.

* US data showed that new claims for jobless benefits edged higher last week, but remained within a range that suggests the labour market’s recovery is on track.

* Investors fear that strong US economic numbers would prompt the Federal Reserve to start tapering its stimulus measures sooner rather than later.

* China’s gold demand could hit a record 1,000 tonnes this year, the World Gold Council said on Thursday, which means it would overtake India as the world’s biggest bullion consumer.

* Gold premiums in India jumped to USD 20 an ounce over London spot prices on Thursday due to short supplies even as traders, looking to stock up for festivals, waited for prices to fall further from their highest level in more than a month.

* Gold mining companies are expected to cut their gold hedging position by 20 tonnes on a net basis in 2013 even though the price of bullion has fallen sharply, precious metals consultancy Thomson Reuters GFMS said on Thursday.

* SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, said its holdings fell 0.26 percent to 927.36 tonnes on Thursday.

* Goldcorp Inc , the world’s largest gold miner by market capitalisation, posted weaker-than-expected second quarter results on Thursday, hit by a sharp drop in the gold price and a USD 2 billion non-cash impairment charge.

MARKET NEWS

* The dollar languished at one-month lows against a basket of major currencies on Friday, having suffered a setback overnight as investors turned cautious ahead of next week’s Fed policy meeting.

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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.