Tag Archives: India

Nov 16

Price of Gold Weekly Recap – November 12-16, 2012

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Monday Open: $1,736.80
Weekly High: $1,736.80
Weekly Low: $1,708.30
Friday Close: $1,713.70

Gold faced a pretty steady downturn all week long in response to economic uncertainty across the board. Major factors leading to the average $20 loss this week included the U.S. fiscal cliff problem that looms on the horizon, continued European debt and a slow buying season in India.

However, gold has stayed over the $1,700 mark since the beginning of November and many are still predicting a climb above $2,000 in 2013.

Monday was a slow trading day in the U.S. since it was Veteran’s Day, and the price didn’t move much. In overseas news, Greece is undergoing fresh economic stimulus after a conference on Sunday, leading to new austerity measures. China faced unexpected growth, and Japan’s economic data points to a near recession, which would be a positive sign for gold.

Tuesday began the slow path downward as disagreements arose among the European Union as to when to disperse Greek’s bailout money. European economic woes put a damper on raw commodity markets, including gold. Meanwhile, in the U.S. Democratic and Republican parties are at a standstill as to how to deal with the upcoming fiscal cliff by the end of the year. If a decision is not made by December 31st, the automatic spending cuts and tax cuts established by the Bush administration will go into effect. The uncertainty here is already showing a volatile effect on gold, but the upside is that it could make the yellow metal seem even more a safe haven.

No real price changes happened on Wednesday, despite two conferences held in the U.S. – Obama addressed the fiscal cliff and the FOMC held their regular meeting, in which they discussed methods of determining when to raise interest rates. The implication is that they will continue their current monetary policy until 2013.

Thursday saw gold take a dip on the continued worries over the fiscal cliff and Eurozone, in which it was revealed that 17 countries are now in a recession. The technical definition of a recession is when a country experiences two consecutive quarters of economic contraction.

Friday continued the four-day dip on a slightly weaker dollar and no fresh news on any of the economic issues. This week was also the beginning of festival season in India, but buying is slow there due to a late harvesting season and the high price of gold. Next week will be fairly slow as the markets will be closed for Thanksgiving. Still, some see gold gaining from the fiscal cliff worries.

Oct 19

Price of Gold Weekly Recap – October 15-19, 2012

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Monday Open: $1,737.30
Weekly High: $1,752.20
Weekly Low: $1,718.00
Friday Close: $1,720.80

Gold opened on a one-month low this week, rallied upwards, then shot back down to close bearishly on a newer one-month low due to global economic pressures. There are a few global factors that contributed to the spikes this week, but as a whole gold is still operating at roughly $200 higher than the $1,500-$1,550 range that dominated most of the first half of 2012.

In a weak global economy, gold acts as a hedge fund and has been on the upswing for the past four years, largely due to economic restructuring of major economic states, not least of which has been the U.S. Federal Reserve’s easy monetary policies. Monday, however, China was on the forefront of traders’ minds, and gold dipped down from the weekend because data revealed that China, whose growth has been slow over the year, though still significantly ahead of the U.S., might not be considering economic restructuring if they can help it. Gold has risen in the past few months in large part due to America and Europe’s monetary loosening, and the same has been expected for China, but September data showed that China’s inflation rate dropped from 2% to 1.9% and their imports grew by 2.4%. This means uncertain trading for gold.

“The bottom line is China’s in this kind of gray area where…things aren’t as good as people want them to be but they’re not bad enough to continue to just throw money at the market,” Matt Zeman of Kingsview Financial said.

Tuesday, gold responded well after the U.S. released positive news on consumer price data, confirming that there is no current threat of significant inflation. If inflation were to appear on the horizon, the Federal Reserve may change their policies to curb price hikes, which would negatively affect gold. Without immediate fear of inflation, the Fed can continue its trend of monetary easing. The dollar also slipped a little compared to other currencies.

However, Wednesday reports on U.S. housing data served to balance out any permanent feeling of comfort regarding the dollar. Housing data was positive, implying that if that trend continues, the Fed may start to slow down their stimulus plans. Spain also received some important news; the struggling country’s credit rating was left unchanged rather than downgraded, and there is still talk of Spain requesting a bailout. Germany also joined the conversation by announcing a lower economic growth rate for 2013 than previously anticipated.

Gold traders anticipated Thursday as results from China’s third-quarter gross domestic product would be released and the European summit would begin. Data from China on Thursday confirmed the foreshadowing from Monday that China may not be as strongly considering economic boosting, since the outlook is good for economic growth.

Friday dropped gold back down below the initial trading point on Monday to a fresh one-month low. The dollar was trading higher on Friday, and the European summit meeting ended, revealing no news from Spain that the country would be asking for a bailout now. Economic uncertainties in all parts of the world contributed to an overall precarious feeling for unconvinced gold traders, causing many to flee the market by the end of the week.

Frank McGhee, precious metals trader of Integrated Brokerage Services LLC, put it this way: “People who rushed in for QE expecting to get a significant lift are getting out of the market.  The longer we don’t make a new high, the more people start getting nervous about where gold is trading.”

This week experienced a 2% drop in gold, the largest weekly decline in four months.

With noncommittal leaders in Spain, a U.S. election on the horizon, a stronger Chinese economy and the season for gold buying in India approaching, yet with a weak rupee, gold seems to be caught once again in a trading limbo. However, once the price of gold breaks $1,800, interest in this precious metal will surely return, as many investors see the yellow metal continuing to perform well in the long-term.

Aug 18

Price of Gold Weekly Recap – August 13-17, 2012

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Monday Open: $1,623.60
Weekly High: $1,623.60
Weekly Low: $1,591.10
Friday Close: $1,615.80

This week’s price of gold story unraveled too similarly to the one that’s been told every week this summer; investors are getting anxious at the lack of change in the market, yet are still mildly hopeful for an upcoming change of events. The three major factors that have kept gold in state of limbo for the first half of 2012 have not improved – the U.S. Federal Reserve has not eased monetary policy, the European Central Bank is slow to enact financial safety measures, and China and India have actually decreased their gold demand. This week saw some especially drab news in the world of gold investing, especially in terms of the global economy, but it was tempered by a new billionaire investor and a survey by Kitco that reports that gold bulls are still a majority.

Monday opened above the $1,600 mark, but that was the highest it would be all week. Early in the week, gold fell as bleak economic reports started tumbling in across the major nations. Japan, China, the U.S. and the European Union all reported economic stagnation without any concrete action to bolster paper reserves or otherwise buffer the commodities market. Gold rises as a hedge fund in relation to the dollar, the euro and commodities like oil, so the lack of movement in these realms translates to a lack of movement for gold.

Tuesday took a slight upturn after some fresh, weak U.S. economic data, but it didn’t last long. A slew of negative data started pouring in as the week wore on, including some statistics from the World Gold Council. According to this gold watchdog organization, gold dropped 7% in the second quarter compared to where it was last year at this time, and jewelry demand fell 15%. Alarmingly to gold bulls, 56% of this drop in gold demand occurred in India, which is well-known to be a powerhouse of gold consumption. A weak rupee and sluggish economic growth may have a hand in that. Also, it came to light on Tuesday that six more European nations are now in an official recession. With gold retreating for four quarters in a row, some may be asking: is the gold rush is over?

It’s hard to say, according to most speculators, but it does depend on a few factors, like central bank policy and the economic health of India and China. George Gero, vice president of RBC Global Futures, had this to say: “Unless we start to see some effect of stimulus, traders are concentrating on what is now. If traders can’t find something positive to point to, they tend to shy away from taking risks.”

And nothing drastic has changed in terms of Fed or ECB policy. The next meeting of the Fed is scheduled for August 31, but it’s hard to say whether any significant policy changes will be enacted. Still, this is the next date on the waiting list for gold investors.

Thursday and Friday saw an increase in the market, so that the week closed only about $5 below the week’s beginning.

But it’s still the same waiting game, and as the chief economist of precious metals trading company Degussa Goldhandel GmbH said, “The monetary affairs of the world probably play the most important role for gold prices going forward. The slowing economy will boost calls for easier monetary policy.” Depending on how central governments and banks respond, gold could see a green light ahead. Out of Kitco’s weekly respondents, 16 of 28 still feel optimistic.

In other somewhat positive news, billionaires George Soros and John Paulson increased their gold holdings, driving confidence to some in the market.