Prithviraj Kothari of bullion leader RSBL telling if “Gold glitters” or not
Managing Director of RSBL, Prithviraj Kothari gave an insight of gold industry and expected ups and downs in gold industry with effects of dollar and equities. In his recent publication ‘Gold Glitters’, Prithviraj Kothari explains how the dollar’s strong position is ensured with positive data which improves the chances of rate hike that eventually affects gold price to fall down and vice a versa. He also explained that how majority of market players were hopeful regarding the data release on October 1, 2015. With gold rate reducing on September 30, 2015 and facing its biggest quarterly loss in a year, the dollar strengthened and the market awaited clarity on the timing of a hotly anticipated U.S. interest rate rise. The spot gold price was seen at $1,112.90/1,113.10 per ounce, down $2.30 on September 30, 2015 close and its lowest in around two weeks. Gold was stable on next afternoon in London following the release of mixed US data and ahead of October 4, 2015 blockbuster US jobs report. • On October 1, 2015, US weekly unemployment claims came in at 277,000 under the psychological 300,000 mark. • During the third quarter, 205,759 jobs were shed, the largest figure since the third quarter of 2009. • US PMI came in as expected at 53.1 and construction spending slightly better than forecast at 0.7 percent. Now that the unemployment’s claims and PMI data was out, markets shifted focus the significant US non-farm payrolls data slated for release on October 2, 2015. The tables for gold turned once the report was out: • Non-farm payrolls in August sank to 173,000, the first sub-200,000 reading since April. • The US economy added 142,000 jobs in September, below the forecast of 201,000, and the August figure was revised down to 136,000 from 173,000. • The only positive news coming in was that unemployment rate was unchanged at 5.1per cent. • The labor participation rate fell to the lowest level since October 1977 at 62.4 percent, while wage growth was flat. The yellow metal prices augmented on the release of lower than expected US data, nearly erasing the losses accrued in five consecutive negative sessions. Physical demand and volatility did not come in much from the Asian markets as the Chinese markets are closed for Golden Week holidays and will reopen on October 8 and the Indian market too was closed on 2nd October. The disappointing non-farm employment change has taken the market by surprise and the reaction has been quite strong such that there are strong sentiments that a chance of increase in interest rates not happen this year thus declining some of the concerns that higher US rates would have a negative impact on emerging markets. Investors were considering for indications on the timing of the US rate rise. With two Fed meetings now left before 2016, markets now believe that the rate hike won’t happen this year. But there are some who believe that the Fed may announce a rate hike in its last meeting of 2015 due in December. RSBL is abbreviated form of RiddiSiddhi Bullions Limited, which is a Mumbai based Bullion dealing company which started its operation in FY1997-98.
Submitted November 25, 2015 at 01:06AM by RSBL
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