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Gold rises to 1-month high on weaker US dollar

22 Jul

Gold hit a high of USD 1,314.49 an ounce, its highest since June 20, and stood at USD 1,312.24 by 0024 GMT, up USD 16.50

mcx goldGold jumped more than 1 percent to its highest level in a month on Monday as the US dollar slipped against other currencies, with gains in Japanese bullion futures adding extra support.

Gold hit a high of USD 1,314.49 an ounce, its highest since June 20, and stood at USD 1,312.24 by 0024 GMT, up USD 16.50. Gold last week posted its second weekly gain after the Federal Reserve’s assurance the timing of any tapering in economic stimulus is not set in stone.

US gold rose 1.49 percent to USD 1,312.10 an ounce. The most active June 2014 gold contract on Tokyo Commodity Exchange rose as high as 4,243 yen a gramme, its highest since June 20, because of a weaker yen.

Hedge funds and money managers raised their bullish bets in gold and silver futures and options in the week to July 16, while they trimmed net shorts in copper, a report by the Commodity Futures Trading Commission showed on Friday.

China’s central bank removed controls on bank lending rates, effective Saturday, in a long-awaited move that signals the new leadership’s determination to carry out market-oriented reforms.

SPDR Gold Trust GLD, the world’s largest gold-backed exchange-traded fund, said its holdings fell 0.29 percent to 932.46 tonnes on Friday from 935.17 tonnes on Thursday.

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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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