Morningstar Trader's Blog

SILVER VIEW

Dipendra Banskota — Fri, 12 Aug 2011 06:22:42 GMT

Silver Review

Silver also fell yesterday along with gold. The immediate delivery future at the COMEX settled 1.67% below prior closing

 The dollar index slid 0.09% despite a better jobless claims data. A rebounded equity market might have made people to shift some money from the refuge to riskier stocks

The US and European equities made a comeback yesterday while Asian equities closed in red

The I-share silver holdings slid a bit to 9890.74 tons from 10010.45 as on 9th Aug

OUTLOOK:

Silver at the Globex platform is quoting up by $0.176 at $38.84. As discussed in Gold’s outlook. Concern over the Euro area’s debt is keeping the Euro under stress. Dilemma to ban short selling while implementing measures to reduce the nation’s budget deficit may make the Euro little volatile for the day. The dollar index is at a stronger note after the equities rebound and lesser jobless data yesterday. It is gaining on anticipation of reports may show a rise in advance retail sales with business inventories to grow a slower pace. However the Euro zone’s industrial production may stall which might impact upon the metal adversely. But support from the global equities again may push the metal up. Overall, silver’s volatility is likely to make the metal swing between gains and losses.

GOLD MARKET

Dipendra Banskota — Fri, 12 Aug 2011 06:18:52 GMT

GOLD MARKET

Gold futures fell for the first time of the week paring the best weekly advance as higher margins on future contracts encouraged sales after the metal rose to cross the $1800 milestone. The immediate delivery future at the COMEX settled 1.84% lower than the prior

 The dollar index slid 0.09% despite a better jobless claims data. A rebounded equity market might have made people to shift some money from the refuge to riskier stocks

 The US and European equities made a comeback yesterday while Asian equities closed in red

 Holdings in the SPDR Gold Trust, the world's largest gold backed exchange-traded fund slid a bit to 1272.89 tons from 1296.51 tons as on 11th Aug after some sell offs have been seen as an effect of raising margin in futures

 The gold-silver ratio slid a bit to 45.25 from 45.33

OUTLOOK

After a brief correction in effect of raising initial and maintenance margin by the CME, gold at the Globex platform is seen to rebound and is quoting up by $10.70, at $1760.50. France, Spain, Italy and Belgium will be banning short selling from today to stabilize the market, that is, they are to protect bets on price falls. Equities rebounded nicely as an unexpected drop in the US jobless claims might have boosted confidence and the dollar is therefore showing the strength against the majors. Asian equities are taking cues there on as reports suggest that things are not as dire as market has feared. Italy seeks to ease labor market laws, sell local services and possibly raise the capital gains tax to eliminate the budget deficit and secure ECB’s support for its bonds after Italian borrowing costs reached the Euro area’s high last week. This might have kept the Euro under pressure along with anticipation on likely report for a stalling expansion in industrial production. From the economic data front, Michigan confidence is still expected to be weaker while an expected upswing in retail sales during summer months could point to a soft patch as consumers are still willing to spend and hence business inventories are also likely to increase at a slower pace. The above analysis shows that there is a blend of impact from the Europe. One side it is Euro nations to protect price fall while Italy’s strive to reduce budget deficit may make the Euro pretty volatile. US releases being expected to be positive, it is therefore likely that gold will remain strong in the Asian hours while it may take little correction in the evening. So, it is recommended to remain short at higher prices for the metal.

SILVER VIEW

Dipendra Banskota — Wed, 10 Aug 2011 05:24:41 GMT

Silver slashed heavily by 3.80% at the COMEX yesterday on the brink of Federal Reserve’s meeting which kept the interest rate unchanged to bolster the economy. The global industrial usage might have hampered which led the metal to retreat amid global uncertainties for a slowing economy.

 The dollar index settled 1.17% lower from the prior closing as the Fed maintained the lower interest rate for an extended period

The Before the Fed meeting started, Asian equities slumped heavily. US and European stocks followed the same at early trades but recovered nicely after the policy statement came, raising the hope for another round of monetary easing

The I-share silver holdings remained unchanged at10010.45 tons from 9858.92 tons as on 5th Aug

OUTLOOK:

Silver at the Globex platform is quoting up by $0.467 at $38.35. As discussed in Gold’s outlook, the Asian equities are reviving nicely after the Fed painted a much gloomier picture of the economy and indicated it would keep cash cheap and easy for at least two more years. The dollar index rebound but is not likely to maintain the initial gain as the US monthly budget in the evening is expected to widen the deficits due to lower tax income from the lowering personal income. The bounce back of equities will be supporting silver to trade high while the rupee appreciation might limit the upside. Also, keeping the rate unchanged by the Fed is basically to bolster the economy and therefore manufacturing, industrial companies might raise the productivity slowly, thereby will be supportive for the metal. On an intraday basis, a likely weak dollar index in the evening, US budget deficit and anticipation of a fore coming monetary easing might lead people to take positions early at this present low prices. Hence silver might remain strong for the day.

GOLD MARKET

Dipendra Banskota — Wed, 10 Aug 2011 05:20:53 GMT

Gold futures advanced for a third straight day after Federal Reserve seeks to bolster the economy by keeping the interest rate unchanged. Amid global equities slump and concern for a slowing economy, gold ticked new high of $1780.90. At the COMEX the immediate delivery future settled 1.74% higher than the prior

 The dollar index settled 1.17% lower from the prior closing as the Fed maintained the lower interest rate for an extended period

 Before the Fed meeting started, Asian equities slumped heavily. US and European stocks followed the same at early trades but recovered nicely after the policy statement came, raising the hope for another round of monetary easing

 Holdings in the SPDR Gold Trust, the world's largest goldbacked exchange-traded fund remained unchanged at 1309.92 tons as on 8th Aug

 The gold-silver ratio improved to 45.96 from 43.46 till yesterday as gold surpassed silver’s performance

OUTLOOK

At the Globex platform gold is seen quoting up by $14.70, at $1756.10. The US and European stocks rallied the most in recent past, reviving from the hefty slump after the Federal Reserve vowed to keep the interest rate near zero. The Fed also discussed a range of policy tools to bolster the economy and raised speculation of a third round quantitative easing through bond purchases. The dollar index rose as a pledge by the Fed to keep the key rate at a record low till 2013 failed to calm concern that the global growth is slowing. The Asian equities also rebounded taking the cues from US and Europe and are trading at a green at present. From the economic data front, the US monthly budget will be announced which is expected to widen its deficit as the government would not have able to raise the tax income to that extent due to a fall in personal income. This might make the dollar weak. So, cheaper money is likely to bid the metal higher for the day. The rupee depreciation by half a percent yesterday prompted Indian gold to settle at a premium to the parity price, which is likely to appreciate today. So, the metal’s upside would be limited although a gap up opening is expected. In the early Asian hours gold is therefore likely to remain stable while in the evening, anticipation of an increasing US deficit budget might lift the metal at a faster pace.

SILVER VIEW

Dipendra Banskota — Tue, 09 Aug 2011 07:08:27 GMT

Silver with tandem to Gold soared but is struggling to break the life high as the metal is related to equities and a global slump is retraining the metal to have a fierce upside. The immediate delivery future at the COMEX closed by gaining 3.06%

 The dollar index settled 0.37% higher from the prior closing

The global equities plunged heavily with DJIA, FTSE all were settled by losing five to seven percent

The I-share silver holdings remained unchanged at10010.45 tons from 9858.92 tons as on 5th Aug

OUTLOOK:

Silver at the Globex platform is quoting little down by $0.175. As discussed in Gold’s outlook, silver’s volatility is increasing due to the global cues from shattering equities and financial turmoil. This added with slumping global manufacturing and industrial productions are making the metal swing between gains and losses. At present the Asian equities are at a hefty amount of loss with the dollar index at a weaker note. The Fed will be holding a meeting today as the unprecedented down grade for the US top credit rating fueled speculation that USA is heading for another economic slowdown. The Indian rupee at present is depreciated by 40 paisa which will be having immense support for the metal to grow. From the economic data front, US nonfarm productivity might be reduced while the UK manufacturing and industrial production may also stall. This may however put a little downside pressure on the metal. So, silver is expected to have a wide range bound movement with bias towards an upside.

GOLD MARKET

Dipendra Banskota — Tue, 09 Aug 2011 07:05:40 GMT

Gold extended its rally to a record second day as the global slump in equities and crude oil deepened concern on economic slowdown which worsen further after S&P downgraded the US credit rating. The immediate delivery future was settled by gaining 3.72% at $1711.60

 The dollar index settled 0.37% higher from the prior closing

 World equities plunged heavily with DJIA, FTSE all were settled by losing five to seven percent

 Holdings in the SPDR Gold Trust, the world's largest goldbacked exchange-traded fund increased to 1309.92 tons from 1286.29 tons as on 8th Aug

 The gold-silver ratio improved to 43.46 from 43.18 till yesterday

OUTLOOK

The yellow metal is on a winning spree amid global anxieties as the equities and crude oil continued to face the mayhem. At present, at the Globex platform Gold is ticking another new high of $1750, $38.40 up from the prior level. The weak dollar index (-0.22%) is supporting the metal to soar along with worries about global financial turmoil, which might have kept investors to stick in to the refuge. The Asian stocks fell for the sixth straight day on worsening global outlook and after data showed Chinese inflation accelerated restraining the government from easing monetary policy. Kospi Index, NIKKEI, Hangseng all are bleeding at present with a loss to anywhere between five to eight percent. The Fed will be holding a meeting today as the unprecedented down grade for the US top credit rating fueled speculation that USA is heading for another economic slowdown. The Indian rupee at present is depreciated by 40 paisa which will be having immense support for the metal to grow. From the economic data front, US nonfarm productivity might be reduced while the UK manufacturing and industrial production may also stall. So, an expected slowing global economy will be keep pushing the metal to an upside. Hence it is recommended to be long for the metal

GOLD MARKET

Dipendra Banskota — Fri, 05 Aug 2011 06:20:25 GMT

SILVER MARKET

Silver futures shaken yesterday by 5.57% after the global equities extended their losses by a hefty margin. A buoyed stock market plunged heavily on absence of any sign to a further monetary easing. A strong dollar index also quickens the fall.

 The dollar index gained more than one and a half percent after Japan sold its currency and the Euro sank as the ECB provided cash to the banks amid debt concern

The global equities extended a hefty slump driving the S&P 500 index to the biggest decline since February 2009, while Europe also plunged by more than 3%

The I-share silver holdings remained unchanged at 9824.93 tons as on 2nd Aug

OUTLOOK:

At the Globex platform silver is seen quoting down by $0.086, at $39.345. As discussed in Gold’s outlook, Asian equities plunged heavily taking cues from the US and European equities as fears about the economic growth raised ahead of key jobs data in US. The dollar index after gaining more than 1.5% yesterday, is paring the gain at present due to the same concern. However, payrolls may add more jobs after the unemployment rose to 9.2%, which might provide the dollar some support to revive in the evening. So, there is a possibility that silver may take another correction with due consideration to the payroll data and reviving dollar index. Hence a range bound move in silver can be expected.

GOLD MARKET

Dipendra Banskota — Fri, 05 Aug 2011 06:01:07 GMT

Gold Market

Gold futures took correction from a new all time high of $1683.50 to settle at 1657.50, 0.44% down from the prior. After the debt ceiling was raised, it was the QE2 which has buoyed the stock market till date, after which the thrust came in absence of any sign for a further round of monetary easing.

 The dollar index gained more than one and a half percent after Japan sold its currency and the Euro sank as the ECB provided cash to the banks amid debt concern

 The global equities extended a hefty slump driving the S&P 500 index to the biggest decline since February 2009, while Europe also plunged by more than 3%

 The ECB yesterday failed to halt a rout in Italy and Spain might have led the Euro to retreat heavily against the dollar

 Holdings in the SPDR Gold Trust, the world's largest goldbacked exchange-traded fund remained unchanged at 1286.29 tons

 The gold-silver ratio dropped to 42.03 from 39.87 after silver fell by 5.57%

OUTLOOK:

At the Globex platform gold is seen quoting down by $6.80, at $1652.20. Asian stocks nosedived taking cues from the global tumult as fears about economic growth concern raised ahead of key economic report on US jobs. This also has kept the dollar index under stress which is at present is down by 0.246%. There is speculation that the CME could raise the margin requirements on a 100 ounce contract like it did with silver after the metal skyrocketed. This means the traders need to put up more money to buy a gold future contract so the result is that a lot of investors are forced to sell, which decreases volatility in the long run. Over the short term, however, it can get ugly as traders exit their positions. From the economic data front, it is the US payrolls data which are due to release in the evening, are expected to add private jobs after the unemployment rose to 9.2%. Investors might have booked the profit to cover losses elsewhere in equities along with the expected jobs data could have prompted the price correction. But, looking at the economic conditions, bullishness still holds good. Overall, gold may remain strong for the day although possibility of a further correction ahead of the crucial data can’t be neglected.

Gold Review

Dipendra Banskota — Tue, 02 Aug 2011 05:11:43 GMT

Gold Review

Gold futures dropped yesterday from record on optimism that the US congress will pass a compromise bill to raise the US debt limit to stave off the default. Gold future for October delivery made a low of $1608.10 although it revived nicely to settle 0.58% below prior closing at $1620.40.

 The dollar index gained over half a percent at settlement as the US clinched the debt deal at the very last moment, just one day prior to the deadline of Aug.2

 The Asian equities closed at a positive note on confidence that the US regulators will take definite step to tame the default. US and Europe stocks however pared the initial gains after reports showed slump in manufacturing indexes

 Manufacturing indexes from the US to Europe and China declined in July raising the concern that the global recovery is losing momentum

 Holdings in the SPDR Gold Trust, the world's largest goldbacked exchange-traded fund remained unchanged at 1263.57 tons as on 1st Aug

 The gold-silver ratio improved to 41.22 from 40.63

OUTLOOK:

At the Globex platform gold is seen quoting up by $1.30 at $1621.70. The House of Representatives approved legislation to raise the US debt limit by at least $2.1 trillion and cut federal spending by $2.4 trillion or more, just one day before the deadline. The plan goes to the Senate for a final vote today. The

US deal offered breather but downgrade looms as the rating agencies threatened and anticipating so, the dollar index is showing weakness. The Asian equities are trading at a downside on slowing manufacturing growth aver the globe. Coming to the economic data front, the US personal income might see a reduction while UK PMI construction may also slid a bit. Dollar therefore might see some pressure in the evening. Since the ceiling has been raised and US for a shorter while is out of danger, precious metals are likely to feel the heat and is expected to retreat a bit. Although the rupee depreciation might push the metal to grow at the Indian context, a slide can’t be over looked.

SILVER REVIEW

Dipendra Banskota — Fri, 29 Jul 2011 06:07:59 GMT

SILVER REVIEW

Silver got a hit yesterday on optimism of the US debt talks. The immediate delivery future retreated by 1.91% at the COMEX

 The dollar index settled with marginal gain before a planned briefing by Obama administration officials on the stalemate in raising the US debt limit that is needed to avert a default

The global equities remained submissive yesterday and settled all most all at a negative side. The ambiguity over the US debt ceiling might led the investors to remain calm for investing in riskier assets, except FTSE all other renowned exchanges fell

The I-share silver holdings remained unchanged at 9915.86 tons as on 27th July

OUTLOOK:

At the Globex platform silver is seen quoting up by $0.006, at $39.80. As discussed in Gold’s outlook, the Asian equities are mostly trading at a downside as the US debt ceiling talks stalled yesterday and were being postponed for today. The vote is likely to take place at 6 pm Washington time. The dollar index at present is at a stronger note on optimism for the US lawmakers to find at least a provisional solution for the debt ceiling. However, the US releases are not likely to support the dollar today as reports might come up with a lower GDP and reduced consumption. Overall, silver also is likely to have a range bound movement today, tending towards downside. It is the debt limit talks which are creating the market jittery. So, silver is likely to have a range bound move for the day

GOLD MARKET

Dipendra Banskota — Fri, 29 Jul 2011 05:54:09 GMT

Gold Market

Gold future took a little correction yesterday on optimism of debt talk till $1602.80 after which it again revived to settle at $1613.40 as the debt talk stalled and vote for the plan postponed.

 The dollar index settled with marginal gain before a planned briefing by Obama administration officials on the stalemate in raising the US debt limit that is needed to avert a default

 Unemployment benefit claims fell in the US by more than expected signaling a fading labor market weakness might have supported the dollar to gain

 The global equities remained submissive yesterday and settled all most all at a negative side. The ambiguity over the US debt ceiling might led the investors to remain calm for investing in riskier assets, except FTSE all other renowned exchanges fell

 Holdings in the SPDR Gold Trust, the world's largest goldbacked exchange-traded fund increased to 1262.97 tons from 1244.79 tons as on 28th July

 The gold-silver ratio improved to 40.54 from 39.81

OUTLOOK:

At the Globex platform gold is seen quoting up by $4.70, at $1618.10 after the US House postponed a vote on speaker John Boehner’s debt limit plan which will be taking place today evening at 6 pm Washington time. Asian stocks, taking cues from the US equities are trading mostly at a downside as the US debt talk stalled yesterday. The dollar index is gaining at present on optimism of the US lawmakers; finding of a temporary solution to the debt limit. In the early morning Japan industrial production on a monthly basis rose but lesser than expected which might have appreciated the Yen. The dollar index is however likely to pare the initial gains as reports in the evening might show a contraction in GDP along with a reduced personal consumption. Overall the bullion sector looks dicey. On one hand it is the debt limit talks, if works out positively, gold will be set to poise. On the other hand, if the opposite happens along with a faltering GDP, gold might be demanded as haven. Under such circumstances it is therefore likely to remain at an elevated level before voting starts. So, it is recommended to be long for a shorter target for the metal.

Commodity money

Dipendra Banskota — Thu, 21 Jul 2011 06:06:22 GMT

Commodity money

Commodity money

Many items have been used as commodity money such as naturally scarce precious metals, conch shells, barley, beads etc., as well as many other things that are thought of as having value. Commodity money value comes from the commodity out of which it is made. The commodity itself constitutes the money, and the money is the commodity. Examples of commodities that have been used as mediums of exchange include gold, silver, copper, rice, salt, peppercorns, large stones, decorated belts, shells, alcohol, cigarettes, cannabis, candy, etc. These items were sometimes used in a metric of perceived value in conjunction to one another, in various commodity valuation or Price System economies. Use of commodity money is similar to barter, but commodity money provides a simple and automatic unit of account for the commodity which is being used as money. Although some gold coins such as the Krugerrand are considered legal tender, there is no record of their face value on either side of the coin. The rationale for this is that emphasis is laid on their direct link to the prevailing value of their fine gold content. American Eagles are imprinted with their gold content and legal tender face value.

SILVER MARKET

Dipendra Banskota — Thu, 21 Jul 2011 05:11:24 GMT

SILVER MARKET

Silver plunged yesterday on the same optimism that the EU leaders would have moved closer to resolve the region’s debt crisis. The immediate delivery future at the COMEX fell 1.65%

 The dollar index settled near half a percent below prior closing as the debt ceiling decision remained indecisive

Global equities closed mixed. While Europe and some Asian regional stocks gained, the US stocks fell after the existing home sales fell unexpectedly

The I-share silver holdings increased to 9864.33 tons from 9673.36 tons as on 19th July

OUTLOOK:

At the Globex platform silver is seen quoting up by $0.537, at $40.095. As discussed in Gold’s outlook, the Asian equities are trading at a downside as a deal to prevent the US debt default remained obscure. The dollar index is therefore sliding against the majors. The Euro area chiefs are having the second summit today in Brussels to solve the second bailout of the Greek default where the German chancellor and the French president are likely to announce a joint position over the same issue. Hence the euro is gaining against the dollar.Coming to the economic data front, the PMI numbers from the Euro zone and German are likely to fall short from the prior level which may impact upon the Euro adversely although the EU chiefs meeting at Brussels today may keep the currency strong on an anticipation of resolving second bailout of Greece. The US releases are also expected to have a mix kind of impact. Hence silver may remain volatile today with bias towards upside. Hence it is recommended to be long for the metal.

GOLD MARKET

Dipendra Banskota — Thu, 21 Jul 2011 04:58:58 GMT

GOLD

Gold fell for the second straight day on optimism that the EU policy makers are moving closer in resolving the region’s debt woes, cutting demand for the metal as haven. The immediate delivery future at the COMEX lost 0.26%.

 The dollar index settled near half a percent below prior closing as the debt ceiling decision remained indecisive

 Global equities closed mixed. While Europe and some Asian regional stocks gained, the US stocks fell after the existing home sales fell unexpectedly

 Gold losses remained limited on concern that the Obama administration and congressional leaders won’t reach an accord on increasing the nation’s debt ceiling

 Holdings in the SPDR Gold Trust, the world's largest goldbacked exchange-traded fund slid to 1246.01 tons from 1249.34 tons as on 20th July

 The gold-silver ratio increased to 40.36 from 39.80

OUTLOOK:

At the Globex platform gold is seen quoting up by $5.20, at $1602.10. Most of the Asian stocks declined as a deal to prevent US debt default remained elusive. Dollar index is therefore also sliding while the Euro is gaining strength against the dollar after the German chancellor and French President reached a joint position on Greece’s debt crisis. The Euro area chiefs are having a summit today with an aim to stem the contagion on expectation of which the Euro is expected to remain strong for the day. On the other hand, US president Obama’s administration has signaled that it may accept a short term increase in the US debt limit if lawmakers need a few days to finish the work on a broader agreement to cut the deficit. Coming to the economic data front, the PMI numbers from the Euro zone and German are likely to fall short from the prior level which may impact upon the Euro adversely although the EU chiefs meeting at Brussels today may keep the currency strong on an anticipation of resolving second bailout of Greece. The US releases are also expected to have a mix kind of impact. Hence gold may remain volatile today with bias towards upside. Hence it is recommended to be long for the metal.

SILVER VIEW

Dipendra Banskota — Fri, 15 Jul 2011 04:47:14 GMT

SILVER REVIEW

Silver climbed to a nine week high after S&P joined Moody’s credit rating to undermine US credit rating. Futures at the COMEX gained 1.42% .

 The dollar index settled 0.01% higher than the prior amid missed talks regarding monetary easing and a better than estimated jobless claims data

 Global equities fell on concern of a failure of right decision by the US president Obama and Congressional leaders to tackle the debt

New applications for unemployment benefits fell last week to the lowest level in recent times, suggesting fewer layoffs in early July than usual

The I-share silver holdings increased to 9633.55 tons from 9500.57 tons as on 13th July

OUTLOOK:

At the Globex platform silver is seen quoting down by $0.469 at $38.225. As discussed in Gold’s outlook, duality in Fed’s remarks for monetary easing within two consecutive days, made investors skeptic about the economy’s outlook. Beside’s a failure to reach any deal on debt ceiling by the Obama administration is also creating ambiguity to contain the debt limit. Data yet to release from the US in the form of manufacturing and industrial production is likely to increase which might provide a boost to the dollar and thereby silver might remain under pressure. The Asian equities are trading at a mix tending towards down side may also trigger silver to retreat. Overall, silver is likely to remain weak for the day and hence is recommended to remain short for the metal.

GOLD REVIEW

Dipendra Banskota — Fri, 15 Jul 2011 04:42:08 GMT

GOLD REVIEW

Gold future rallied to a record high of $1594.90 to settle at 0.24% higher from the prior at $1589.30 on speculation that debt woes in the US and Europe will escalate, boosting the appeal of the precious metal.

 The dollar index settled 0.01% higher than the prior amid missed talks regarding monetary easing and a better than estimated jobless claims data

 Global equities fell on concern of a failure of right decision by the US president Obama and Congressional leaders to tackle the debt

 New applications for unemployment benefits fell last week to the lowest level in recent times, suggesting fewer layoffs in early July than usual

 Holdings in the SPDR Gold Trust, the world's largest gold backed exchange-traded fund remained unchanged at 1225.40 tons from 1205.41 tons as on 14thJuly

 The gold-silver ratio slid to 41.07 from 41.55

OUTLOOK:

At the Globex platform gold is seen quoting down by $5.60, at $1583.70. The Fed is prepared to take additional action if the economy appears to be in danger of stalling, Bernanke said recently but opposed the same yesterday while president Obama and congressional; leaders have as yet failed to reach a compromise on reducing deficits and raising the debt ceiling. The dollar index is therefore weakening after S&P joined Moody’s and came out with a likely US credit rating cut. The Asian equities are trading at a mix, tending mostly towards downside amid uncertainties of US economic conditions whether to provide stimulus or not. Coming to the economic data front, the US consumer price index is likely to ease while the manufacturing and industrial productions are likely to improve. These may provide a boost to the dollar in the evening. In Europe, results of stress tests on 91 banks as part of an effort to reassure investors the region’s lenders have enough capital will be released by the European Banking Authority today. Overall, gold seems to be little weak today and hence is recommended to remain short for the metal.

GOLD REVIEW

Dipendra Banskota — Thu, 14 Jul 2011 06:13:18 GMT

GOLD REVIEW

Gold future rallied to a record high of $1588.90 to settle at $1585.50 amid concern of Moody’s warning to the US about the probability of losing its “Aaa” debt rating. US debt ceiling talks stumbled and Europe’s sovereign crisis persisted, boosting demand for the haven.

 The dollar index plunged more than a percent yesterday after Moody’s put US under review for a credit rating downgrade, damping demand for the nation’s currency

 Global equities remained firm. Despite the dollar retreated, Bernanke’s probable arrangement for more stimulus package kept the investors confident to contain the risk

 US president Barack Obama and Congressional leaders have as yet failed to reach a compromise on reducing deficits and raising the $14.3 trillion federal debt ceiling before the government exceeds its borrowing authority on Aug.2

 Holdings in the SPDR Gold Trust, the world's largest goldbacked exchange-traded fund increased to 1225.40 tons from 1205.41 tons as on 13th July, indicating growing investment demand

 The gold-silver ratio slid to 41.55 from 43.84

OUTLOOK:

At the Globex platform gold is seen quoting up by $0.90, at $1586.40. The dollar index is at a weaker note on Moody’s warning. The Asian equities are trading mix amid uncertainty of the US economy’s fate. Fed chairman Bernanke will testify the debt limit for a second day before lawmakers amid data that is likely to show retail sales slid in June. If the data come soft, it would give the market more of an excuse to anticipate more quantitative easing. He also said that he is prepared to provide more stimuli if needed after the dollar sank 1.4% against the Euro within a single day and warned a failure by congress to raise the debt limit would send shock waves through the financial system which is an enough reason for the metal to take an up ride. Italy is due to sell government debt today amid concern that the crisis may be spreading to that nation. Besides, Fitch has cut Greece’s credit grades to its lowest for any country in the world. The move from “B+” to “CCC” reflects the absence of a new fully funded and credible program by the IMF and the EU which intensified a real possibility of default. Overall, gold is likely to remain strong for the day and hence is recommended to be long for the metal.

SILVER REVIEW

Dipendra Banskota — Wed, 13 Jul 2011 06:23:59 GMT

SILVER REVIEW

Silver remained pretty volatile yesterday however revived towards end after the EU finance ministers failed to defuse the region’s financial woes. Futures at the COMEX fell slightly .

 The dollar index settled 0.24% lower than the prior after The Fed report said policymakers continued to debate whether additional stimulus will be needed if the outlook for economic growth remains weak

 Global equities shattered yesterday after Ireland’s downgrade to junk status added concern on Europe is losing control of the credit crisis

Ireland joined Portugal and Greece as the third Euro are nation to have its credit rating to below investment grade as European finance ministers struggle to contain debt

The I-share silver holdings remained unchanged at 9532.4 tons

OUTLOOK:

At the Globex platform silver is seen quoting up by $0.556, at $36.19. As discussed in Gold’s outlook, the Asian equities gathered momentum after Chinese GDP rose better than expected with acceleration in industrial production. The dollar index is at a lower side as the Fed minutes of the meeting showed no confirm solution about the monetary easing in near term. Ireland entered as the third Euro nation of getting the junk rating and the debt contagion is likely to spread to Italy. Economic release from the US scheduled today in form of monthly budget, is likely to widen the deficit which will be supporting the metal’s price. Hence it is recommended to be long for the metal.

GOLD MARKET

Dipendra Banskota — Wed, 13 Jul 2011 06:20:07 GMT

GOLD MARKET

Gold futures rose to a record settlement as Europe’s debt crisis boosted demand for the metal as a haven. The Euro fell against the dollar after a meeting of EU finance ministers failed to defuse the region’s fiscal woes. COMEX future immediate delivery advanced 0.85%.

 Global equities shattered yesterday after Ireland’s downgrade to junk status added concern on Europe is losing control of the credit crisis

 Ireland joined Portugal and Greece as the third Euro are nation to have its credit rating to below investment grade as European finance ministers struggle to contain debt

 Holdings in the SPDR Gold Trust, the world's largest goldbacked exchange-traded fund increased to 1225.40 tons from 1205.41 tons as on 12thJuly, indicating growing investment demand

 The gold-silver ratio improved to 43.84 from 43.39

OUTLOOK:

At the Globex platform gold is seen quoting up by $3.40, at $1565.80. Asian stocks halted a two day slump after China in the early morning reported a stronger than forecasted economic growth. Chinese GDP rose to 9.5% YOY basis while industrial production also accelerated, indicating the economy is still maintaining momentum even after hike in interest rate to cool inflation. The dollar index at present is weakening against the Euro and with this currency volatility and the debt contagion risk in Greece which is likely to spread in Italy, investors are therefore likely to gravitate towards something tangible like gold. Besides, the Fed policy makers disagreed on whether additional monetary stimulus will be needed, even if the outlook for economic growth remain weak, minutes of their meeting last month showed. Some members noted that the committee might need to consider further stimulus, while others voiced concern about an increased inflation risk that might warrant tighter monetary policy. This is further propelling dollar to fall against the majors. The data yet to release from the US in form of monthly budget is further expected to widen the deficit which might be another triggering factor for gold. Overall, gold seems to remain strong for the day and hence is recommended to be long for the metal.