GOLD AND SILVER PRICES ON RISE : RSBL

gold-bars-6

Precious metals price rise is eminent and it ended the week on a positive note post poor US data released. The negative data sent the dollar tumbling, stimulating a good recovery for the yellow metal and its white counterparts.

Data released from the US was as follows:

  • GDP data out of the U.S. disappointed on Friday, growing at a seasonally and inflation adjusted +1.2% during Q2 (exp: +2.5%) as business inventories contracted for the first time since Q3 2011
  • The University of Michigan’s consumer sentiment index dropped to 90.0 in July (exp: 90.2) from 93.5 in June as both current and future conditions declined.
  • The poor data countered the Fed’s statement that the US economy is stable and the near-term outlook is positive. Even though the unemployment rate is around five percent, the policy-board has been ineffective at spurring inflation or consistent wage growth. All eyes were on this meeting as something crucial was expected to happen regarding the interest rate hike. But negative data has postponed this hike and this gave gold the push.

Apart from the US there was news that came in from other economies which affected the gold price:

U.S Dollar:

Major downturn in the dollar created by the release of second quarter US GDP where it plummeted to 95.38 around the lowest mark since mid-June, before staging a modest uptick to 95.60.

Japan:

Host of new data releases and a Bank of Japan decision to inject further stimulus, markets were directionless this week with volatility and volumes continuing to drift lower. The Bank of Japan (BoJ) decided to adopt a minor adjustment to the existing monetary policy by increasing its purchases of exchange-traded stock funds to 6 trillion yen and expanded its dollar lending programme to $24 billion but kept its policy rate unchanged at -0.1 percent while maintaining the pace of government bond purchases.

The BOJ certainly doubled purchases of exchange-traded funds (ETFs) and said it will “conduct a thorough assessment of the effects of negative interest rates and its massive asset-buying program in September.”

The bank was considering a $265 billion package, part of which would target low-income citizens in another attempt to boost inflation and weak wage growth.

This can be understood as- either the central bank may feel that Japan’s economic growth needs very, very extensive stimulation and they have yet to formulate an appropriate plan or it can be interested that they want to see how the chips fall in eight weeks and move cautiously from there.

India:

Coming to the domestic markets- India being one of the largest consumers of gold, but currently the demand for gold isn’t intense. Frankly speaking, very few people want to invest in gold at this price. Buyers, it seems, feel that the current price is not sustainable and hence, they wait for a correction. Gold price in India is governed by two major factors: global economic conditions and the movement of rupee against the dollar. Both factors have contributed to the current price rise. While global economic conditions continue to pose a greater risk by the day following fluctuating recovery trend in the United States, Britain’s exit from the European Union (BREXIT) and other geopolitical tensions. On the other hand, Indian rupee has depreciated against the greenback despite reports of good inflow of dollars.

Since BREXIT, spot gold price jumped rapidly but, stayed elevated. Also, rainy season is considered as a lean period for gold purchase due to the lack of festivals, weddings or any other occasions during this season. Also, consumers have faced two subsequent years of deficient monsoon rainfalls. Although, the current year has seen normal rainfalls yet its distribution continues to remain uneven. Also, the crucial rainfall month – August – is yet to come. So, let’s keep our fingers crossed for the Kharif sowing and harvesting this year. In case of normal monsoon and its even distribution, Kharif crop would bring some cheers for farmers with higher output which would translate proportionate increase in gold demand.

In India, therefore, standard gold is available at Rs. 31,300 per 10 grams approx. Gold price may touch $1400 in near future in the international markets which will translate in rupee term at Rs. 32,500 per 10 grams. While the uptrend continues there could be some profit booking.

5 Comments

  • Dillian Posted 6th December 2016 11:19 pm

    Fidinng this post solves a problem for me. Thanks!

  • yeezy boost 350 Posted 3rd September 2017 7:21 am

    I truly wanted to jot down a comment to be able to thank you for all of the unique secrets you are sharing on this site. My rather long internet research has finally been compensated with really good strategies to talk about with my neighbours. I would assume that we readers are unequivocally blessed to be in a good place with very many awesome people with insightful solutions. I feel very grateful to have seen your entire webpage and look forward to plenty of more excellent minutes reading here. Thanks a lot once more for all the details.

  • nike dunks Posted 5th September 2017 12:51 pm

    very good post, i definitely love this web site, carry on it

  • adidas ultra boost 3.0 Posted 5th September 2017 7:12 pm

    I and my friends were found to be looking through the good solutions on your website and so suddenly I had a terrible feeling I had not expressed respect to the web blog owner for those secrets. The young boys are already so excited to read all of them and have certainly been loving them. Appreciation for simply being simply helpful and also for making a choice on such smart information most people are really needing to learn about. My personal sincere regret for not expressing gratitude to you earlier.

  • yeezy boost 350 v2 Posted 7th September 2017 11:44 pm

    I wanted to make a brief message to appreciate you for those nice concepts you are writing on this website. My time consuming internet investigation has now been rewarded with beneficial content to exchange with my neighbours. I would assume that we readers are very blessed to be in a fantastic website with so many perfect individuals with beneficial strategies. I feel pretty lucky to have discovered your webpage and look forward to so many more exciting moments reading here. Thanks a lot again for all the details.

Add Comment

Your email address will not be published. Required fields are marked *