Bullion Monthly Report July
Technical Levels (1 Month) July (cmp as on 03 July 2014)
Commodity -------------------Support 1----- Support 2-------- CMP -----Resistance 1 -----Resistance 2
Spot Gold ($/oz)---------------- 1270 ----------1210 ------------1322 ------1360------------- 1390
MCX Gold August (Rs./10 gms) 26300 ---------25000---------- 27663---- 28500------------ 29300
Spot Silver ($/oz) ----------------19.30--------- 17.70 ------------21.03------ 21.90------------ 22.80
MCX Silver Sept Contract (Rs./kg) 42000----- --39000-----------45052----- 47000 ------------50000
For trading purpose recommended for long time trader buy on dips. But our previous buy zone yearly trader still pending. So few lots can buy this month middle of July.
Technical Levels (1 Month) July (cmp as on 03 July 2014)
Commodity -------------------Support 1----- Support 2-------- CMP -----Resistance 1 -----Resistance 2
Spot Gold ($/oz)---------------- 1270 ----------1210 ------------1322 ------1360------------- 1390
MCX Gold August (Rs./10 gms) 26300 ---------25000---------- 27663---- 28500------------ 29300
Spot Silver ($/oz) ----------------19.30--------- 17.70 ------------21.03------ 21.90------------ 22.80
MCX Silver Sept Contract (Rs./kg) 42000----- --39000-----------45052----- 47000 ------------50000
For trading purpose recommended for long time trader buy on dips. But our previous buy zone yearly trader still pending. So few lots can buy this month middle of July.
News and Developments
Banks have started trial gold imports directly into the Shanghai free trade zone
Banks have started trial gold imports directly into the Shanghai free trade zone ahead of the launch of a gold exchange there, threatening to further obscure the level of buying by the world's top consumer.
The bulk of gold bought by China used to flow through Hong Kong, making its export data a useful proxy for Chinese demand as Beijing treats data about imports of the precious metal as a state secret.
Global benchmark fixes have come under increased scrutiny
The global gold price setting benchmark or "fix" is open to manipulation, said the head of the London Metal Exchange (LME), which is competing to offer an alternative to the silver fix when the system is disbanded in August.
The gold and silver fixes, along with other commodity benchmarks, have come under increasing scrutiny by regulators in Europe and the United States since a London Interbank Offered Rate (Libor) manipulation case last year.
Russia's gold reserves rose to 4.7 million troy ounces in May
Russia's gold reserves rose to 4.7 million troy ounces in May from 34.4 million troy ounces in April,
The value of its holdings declined to $43.46 billion as of June 1 from $44.30 billion a month ago
China to tap global gold markets launching gold contracts in different countries
China, along with exchanges in Singapore and Hong Kong, are launching gold contracts this year in a bid to tap a market looking for a viable alternative to the metal's global benchmark that is under regulatory scrutiny
The US economy contracted at a much steeper pace in the first quarter
The U.S. economy contracted at a much steeper pace in the first quarter than previously estimated, turning in one of its worst-ever non-recession performances, but growth already appears to have rebounded strongly.
The Singapore Exchange said it will launch a physically deliverable gold contract to meet demand in Asia, the top consumer of the precious metal.
The contract, expected to be launched in September, is the first wholesale 25 kilobar gold contract to be offered globally and comprises a series of six daily contracts
Gold jewellery exports from India to rise in 2015
Gold jewellery exports from India are likely to grow by a quarter in the year to March 2015, helped by an expected relaxation of import policy and recovering demand from major consuming countries, the head of a trade body said
Exports of gold jewellery fell by more than half last year due to non-availability of the precious metal after the government tied the import of gold to exports. It also raised the import duty to a record 10 percent.
Gold Monthly Price Analysis
Investors often turn to gold or other precious metals as a safe haven in times of political or financial uncertainty. So far this year, gold has maintained its gains due to heightened geopolitical tensions. For the quarter, gold has gained about 3.5 percent after a nearly 7 percent gain in the first quarter, its first two-quarter rise since 2011, as tensions over Ukraine and Iraq lifted its appeal as a hedge. In addition, technical buying, bargain hunting and drop in dollar index to multi week low has prompted buying interest in the yellow metal.
Spot gold gained by more than 6 percent in June. Gains were initially boosted by developments in Ukraine, where pro-Russian separatists shot down a Ukrainian army transport plane. In addition, lower U.S. 2014 growth forecast by the Fed and its lack of commitment to raise interest rates and continued tensions in the Middle East unleashed a wave of short covering. After prices pierced above $1,305 an ounce, it triggered heavy stop-loss orders for traders who had previously expected lower bullion prices on hopes of a better U.S. economy.
Gold market participants have been monitoring the Fed's policy statements for clues on when it might begin raising interest rates, a move likely to weigh on bullion, which does not offer its holders interest or dividends. In its last meeting, the Fed signalled that it will stick with a near-zero interest rate policy to support the economy, disappointing traders who had bet on hints of policy tightening.
The central bank also slashed its forecast for U.S. economic growth to a range of between 2.1 percent and 2.3 percent from an earlier forecast of around 2.9 percent, but expressed confidence the recovery was largely on track. The growth forecast reduction suggested that the Fed may not be in a hurry to accelerate tapering appealing bullion as an asset class. The Fed also reduced its monthly asset purchases from $45 billion to $35 billion.
On the flip side, the investment interest and Chinese demand seems to be lacklustre. Gold holdings in SPDR gold trust has barely changed month on month. Holdings as on 27th June stand at 785.02 tonnes a meagre decline of 0.26 tonnes when compared to previous month. In addition, comments from China Gold Association, that private sector demand will be flat to slightly lower this year although demand for gold jewelry remains strong. Interest in the gold bar investments remain soft because of fears of weakness in gold prices. China’s gold demand in the first quarter of 2014 slowed 0.8 percent to 323 tonnes as as a 44 percent slump in bar demand offset a 30 percent rise in jewelry demand. Figures for second-quarter China gold demand will be published this month. This factors can possibly lead to correction in bullion prices as we move ahead in the next quarter.
In the indian markets, gold prices on the MCX has gained by more than 3 percent in June’ 14, while spot gold prices (Mumbai) registered a gain of more than 4 percent. The gains are in line with strength in the international markets. Rupee for the same time frame depreciated by around 1.46 percent.
Meanwhile, the CFTC positioning indicates that money managers have continuously increased their bullish bets on gold in June wherein net longs as on 24th June’14 stood at 114356 contracts, an increase of 67 percent or 45963 contract when compared to the 27th May’14 indicating bullish scenario.
Silver
Silver's break above $20 has continued to draw interest from momentum investors . Spot silver prices gained by more than 12 percent in June its best ever gains in last six months as speculators renewed interest in the metal has pushed it higher. Besides, strength in bullion prices on account of lingering tensions in Ukraine and Iraq acted as a positive factor
In the Indian markets, silver prices gained by around 11 percent in line with strength in the international market. In additon the rupee depreciated by around 1.4 percent which further pushed prices higher.
Meanwhile, the CFTC positioning also indicates that money managers have turned in to net longs from net shorts the previous month. As on 24th June’14 money managers are net longs at 24757 contracts in comparison to net shorts of 6997 contracts on 27th May’14.
Money Managed Net Silver
Source:Reuters, Angel Research
Outlook
Bullions recent gains were largely driven by short covering as speculators aggressively bought back their bearish bets. Lower U.S. 2014 growth forecast by the Fed and lingering geopolitical tensions in Iraq and Ukraine rekindled investors' interest in gold. This strength in gold prices has failed to attract the investment interest in the gold-backed exchange traded funds as demand remains subdued.
Demand for gold is lackluster in Asia(home of the main consumers of physical metal) as price-sensitive buyers had been put off by its latest rally. With the higher prices, physical demand from top consumers China and India has been slow to pick up. Without strong demand either from the physical markets or from exchange-traded funds gold rally will not last for long.
There is, however, little doubt that the US economy is expanding, decreasing gold's appeal as a hedge. The economic indicators released in the recent weeks continue optimism about the US economy although the GDP data showd signs of slowdown. Job market has also been showing signs of improvement as the number of Americans seeking unemployment benefits fell again in the recent weeks. In additon, hopes of hike in interest rates by the Federal Reserve sooner or later will pressurize gold prices for the rest of the year.
For July, we expect spot gold prices to turn higher towards $1350 and then correct towards $1280/oz. (CMP:$1325). While gold prices on the MCX can turn higher towards Rs.27900 to Rs.28200 and then correct towards Rs.26000/10 gm mark if break 25600 then very good support at 24900
Managed Net Gold F&O
Source:Reuters, Angel Research
Banks have started trial gold imports directly into the Shanghai free trade zone
Banks have started trial gold imports directly into the Shanghai free trade zone ahead of the launch of a gold exchange there, threatening to further obscure the level of buying by the world's top consumer.
The bulk of gold bought by China used to flow through Hong Kong, making its export data a useful proxy for Chinese demand as Beijing treats data about imports of the precious metal as a state secret.
Global benchmark fixes have come under increased scrutiny
The global gold price setting benchmark or "fix" is open to manipulation, said the head of the London Metal Exchange (LME), which is competing to offer an alternative to the silver fix when the system is disbanded in August.
The gold and silver fixes, along with other commodity benchmarks, have come under increasing scrutiny by regulators in Europe and the United States since a London Interbank Offered Rate (Libor) manipulation case last year.
Russia's gold reserves rose to 4.7 million troy ounces in May
Russia's gold reserves rose to 4.7 million troy ounces in May from 34.4 million troy ounces in April,
The value of its holdings declined to $43.46 billion as of June 1 from $44.30 billion a month ago
China to tap global gold markets launching gold contracts in different countries
China, along with exchanges in Singapore and Hong Kong, are launching gold contracts this year in a bid to tap a market looking for a viable alternative to the metal's global benchmark that is under regulatory scrutiny
The US economy contracted at a much steeper pace in the first quarter
The U.S. economy contracted at a much steeper pace in the first quarter than previously estimated, turning in one of its worst-ever non-recession performances, but growth already appears to have rebounded strongly.
The Singapore Exchange said it will launch a physically deliverable gold contract to meet demand in Asia, the top consumer of the precious metal.
The contract, expected to be launched in September, is the first wholesale 25 kilobar gold contract to be offered globally and comprises a series of six daily contracts
Gold jewellery exports from India to rise in 2015
Gold jewellery exports from India are likely to grow by a quarter in the year to March 2015, helped by an expected relaxation of import policy and recovering demand from major consuming countries, the head of a trade body said
Exports of gold jewellery fell by more than half last year due to non-availability of the precious metal after the government tied the import of gold to exports. It also raised the import duty to a record 10 percent.
Gold Monthly Price Analysis
Investors often turn to gold or other precious metals as a safe haven in times of political or financial uncertainty. So far this year, gold has maintained its gains due to heightened geopolitical tensions. For the quarter, gold has gained about 3.5 percent after a nearly 7 percent gain in the first quarter, its first two-quarter rise since 2011, as tensions over Ukraine and Iraq lifted its appeal as a hedge. In addition, technical buying, bargain hunting and drop in dollar index to multi week low has prompted buying interest in the yellow metal.
Spot gold gained by more than 6 percent in June. Gains were initially boosted by developments in Ukraine, where pro-Russian separatists shot down a Ukrainian army transport plane. In addition, lower U.S. 2014 growth forecast by the Fed and its lack of commitment to raise interest rates and continued tensions in the Middle East unleashed a wave of short covering. After prices pierced above $1,305 an ounce, it triggered heavy stop-loss orders for traders who had previously expected lower bullion prices on hopes of a better U.S. economy.
Gold market participants have been monitoring the Fed's policy statements for clues on when it might begin raising interest rates, a move likely to weigh on bullion, which does not offer its holders interest or dividends. In its last meeting, the Fed signalled that it will stick with a near-zero interest rate policy to support the economy, disappointing traders who had bet on hints of policy tightening.
The central bank also slashed its forecast for U.S. economic growth to a range of between 2.1 percent and 2.3 percent from an earlier forecast of around 2.9 percent, but expressed confidence the recovery was largely on track. The growth forecast reduction suggested that the Fed may not be in a hurry to accelerate tapering appealing bullion as an asset class. The Fed also reduced its monthly asset purchases from $45 billion to $35 billion.
On the flip side, the investment interest and Chinese demand seems to be lacklustre. Gold holdings in SPDR gold trust has barely changed month on month. Holdings as on 27th June stand at 785.02 tonnes a meagre decline of 0.26 tonnes when compared to previous month. In addition, comments from China Gold Association, that private sector demand will be flat to slightly lower this year although demand for gold jewelry remains strong. Interest in the gold bar investments remain soft because of fears of weakness in gold prices. China’s gold demand in the first quarter of 2014 slowed 0.8 percent to 323 tonnes as as a 44 percent slump in bar demand offset a 30 percent rise in jewelry demand. Figures for second-quarter China gold demand will be published this month. This factors can possibly lead to correction in bullion prices as we move ahead in the next quarter.
In the indian markets, gold prices on the MCX has gained by more than 3 percent in June’ 14, while spot gold prices (Mumbai) registered a gain of more than 4 percent. The gains are in line with strength in the international markets. Rupee for the same time frame depreciated by around 1.46 percent.
Meanwhile, the CFTC positioning indicates that money managers have continuously increased their bullish bets on gold in June wherein net longs as on 24th June’14 stood at 114356 contracts, an increase of 67 percent or 45963 contract when compared to the 27th May’14 indicating bullish scenario.
Silver
Silver's break above $20 has continued to draw interest from momentum investors . Spot silver prices gained by more than 12 percent in June its best ever gains in last six months as speculators renewed interest in the metal has pushed it higher. Besides, strength in bullion prices on account of lingering tensions in Ukraine and Iraq acted as a positive factor
In the Indian markets, silver prices gained by around 11 percent in line with strength in the international market. In additon the rupee depreciated by around 1.4 percent which further pushed prices higher.
Meanwhile, the CFTC positioning also indicates that money managers have turned in to net longs from net shorts the previous month. As on 24th June’14 money managers are net longs at 24757 contracts in comparison to net shorts of 6997 contracts on 27th May’14.
Money Managed Net Silver
Source:Reuters, Angel Research
Outlook
Bullions recent gains were largely driven by short covering as speculators aggressively bought back their bearish bets. Lower U.S. 2014 growth forecast by the Fed and lingering geopolitical tensions in Iraq and Ukraine rekindled investors' interest in gold. This strength in gold prices has failed to attract the investment interest in the gold-backed exchange traded funds as demand remains subdued.
Demand for gold is lackluster in Asia(home of the main consumers of physical metal) as price-sensitive buyers had been put off by its latest rally. With the higher prices, physical demand from top consumers China and India has been slow to pick up. Without strong demand either from the physical markets or from exchange-traded funds gold rally will not last for long.
There is, however, little doubt that the US economy is expanding, decreasing gold's appeal as a hedge. The economic indicators released in the recent weeks continue optimism about the US economy although the GDP data showd signs of slowdown. Job market has also been showing signs of improvement as the number of Americans seeking unemployment benefits fell again in the recent weeks. In additon, hopes of hike in interest rates by the Federal Reserve sooner or later will pressurize gold prices for the rest of the year.
For July, we expect spot gold prices to turn higher towards $1350 and then correct towards $1280/oz. (CMP:$1325). While gold prices on the MCX can turn higher towards Rs.27900 to Rs.28200 and then correct towards Rs.26000/10 gm mark if break 25600 then very good support at 24900
Managed Net Gold F&O
Source:Reuters, Angel Research
Technical Levels (1 Month)
Commodity --------------Support 1----- Support 2-------- CMP -----Resistance 1 -----Resistance 2
Spot Gold ($/oz)--------- 1270 ----------1210 ------------1322 ------1360------------- 1390
MCX Gold August (Rs./10 gms) 26300 ---25000---------- 27663---- 28500------------ 29300
Spot Silver ($/oz) --------19.30--------- 17.70 ------------21.03------ 21.90------------ 22.80
MCX Silver Sept Contract (Rs./kg) 42000 --39000--------45052----- 47000 ------------50000
Commodity --------------Support 1----- Support 2-------- CMP -----Resistance 1 -----Resistance 2
Spot Gold ($/oz)--------- 1270 ----------1210 ------------1322 ------1360------------- 1390
MCX Gold August (Rs./10 gms) 26300 ---25000---------- 27663---- 28500------------ 29300
Spot Silver ($/oz) --------19.30--------- 17.70 ------------21.03------ 21.90------------ 22.80
MCX Silver Sept Contract (Rs./kg) 42000 --39000--------45052----- 47000 ------------50000
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