Tag Archives: mcx news

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.

Gold near one-month high as dollar slips

23 Jul

A weaker dollar supported bullion prices, but stricter Indian import rules and continued outflows from exchange-traded gold funds could cap gains

goldGold was trading near its highest in a month on Tuesday after gaining 3 percent the session before and breaking through key resistance at the USD 1,300 level.

A weaker dollar supported bullion prices, but stricter Indian import rules and continued outflows from exchange-traded gold funds could cap gains.

 FUNDAMENTALS

* Spot gold was down 0.08 percent at USD 1,334.01 an ounce by 0020 GMT, while US gold fell USD 2.50 to USD 1,333.50.

* Gold hit a one-month high of USD 1,338.91 on Monday, as speculators fearing a reversal of the recent downward price trend rushed to buy back bearish bets.

* Bullion prices have garnered support from Federal Reserve chief Ben Bernanke’s assurance last week that the US central bank would be careful in scaling back its USD 85 billion monthly bond purchases.

* September is still the most likely time for the Fed to announce that it will trim its monthly bond purchases, according to a Reuters poll taken after Bernanke’s congressional testimony last week.

* Analysts have slashed their 2013 gold and silver price forecasts after sharp falls earlier this year and expect them to remain weak in 2014 as the United States reins in monetary stimulus, a Reuters poll showed on Monday.

* India’s central bank moved to tighten gold imports again on Monday, making them dependent on export volumes with an eye to reducing a record current account deficit, but offered relief to domestic sellers by lifting restrictions on credit deals.

* SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, said its holdings fell 0.13 percent to 931.26 tonnes on Monday.

* A group of indigenous Chileans asked the Supreme Court to revoke the environmental license of Barrick Gold Corp’.

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