Gold price falls below Rs 28,000 per 10 grams level

Mumbai: bullion comprehensive its slither on the bullion souk here Wednesday and dropped below the Rs 28,000 per 10 grams level on continual selling by stockists and poor trade demand in the environment of bearish universal cues.

Silver also destabilized additional following heavy unwinding from speculators amid condensed manufacturing insist.

Normal gold (99.5 purity) dropped by Rs 235 to close at Rs 27,800 per 10 grams from Tuesday's level of Rs 28,035.

Pure bullion (99.9 purity) dipped by Rs 230 to end at Rs 27,950 per 10 grams from Rs 28,180 beforehand.

hoary (.999 fineness) drooping by Rs 555 to end at Rs 45,055 per kg as beside during the night close of Rs 45,610.

In New York, bullion prices upturned previous gains to close lower for a third meeting yesterday in the wake of dovish comments from Federal Reserve Chairwoman Janet Yellen.

Gold for August release slid to USD 1,297.10 an ounce (28gm) on the Comex separation of the NYMEX late yesterday, while gray slipped to USD 20.89 an ounce.

Gold value rallies to maximum in a month, reclaims $1,250 level

 

Singapore: bullion extended gains to a third sitting on Monday to punch its maximum in a month after a astoundingly weak US jobs statement stoked potential that the Federal Reserve could rage the rapidity of its incentive wind-down.

A weaker U.S. dollar also supported prices, even if corporeal require in China - the world`s major bullion consumer - dropped off unpaid to the convention in prices.

Spot bullion was up 0.4 percent at USD 1,251.60 an little by 0313 GMT, after bass beat USD 1,254.05 previous - its peak given that December 12. "Prices may carry on to increase dig USD 1,267," said Joyce Liu, an asset psychiatrist at Phillip Futures. "As it`s wages period for U.S. equities, large disappointments in company wages may also shortest some resources flipside to bullion."

"However, the universal macroeconomic emotion and attitude carry on to weigh on gold, in particular as bond yields  continue to increase and prediction for USD linger cheerful. As such, we would believe bullion prices this week to be mostly supported but exposed to end the current gathering."

Gold mislaid virtually 30 percent of its price in 2013 as burly U.S. monetary data provoked the Fed to level back its incentive. In January, though, bullion prices have been supported by weaker equities and vigorous require in China to the front of the planetary New Year.

A reduce speed in outflows from SPDR bullion belief GLD, the world`s major gold-backed exchange-traded fund, has also helped.

Prices were agreed a transformed improve by Friday`s U.S. nonfarm payroll data which showed that U.S. employers hired the smallest personnel in virtually 3 years in December.

Markets deem the weak jobs statement could punctual the Fed to continue with concern in contraction its momentous financial incentive. The Fed last month announced its first cut to the USD 85 billion bulletin bond purchases. Other data on Friday showed that prevaricate finances and money managers raised their net long positions in gold futures and options for a subsequent directly week.

On the Shanghai Gold Exchange, premiums for 99.99 percent spotlessness bullion XAU9999=SGEX fell to about USD 15 from Friday`s USD 18 as the charge expand deterred some buyers.

Buying from China was strapping last week unpaid to new year purchases but have now slowed, traders thought.

2014 may well be enhanced year for US wealth: Ben Bernanke

 

Federal Reserve Chairman Ben Bernanke on Friday predicted a stronger year for the US economy in 2014, saying several factors that have held back growth appear to be abating.

Americans' finances have improved and the outlook for home sales is brighter, Bernanke said. He also expects less drag from federal spending cuts and tax increases.

The combination "bodes well for US economic growth in coming quarters," Bernanke said during a speech to the annual meeting of the American Economic Association in Philadelphia.

Bernanke made a similar assessment of the economy at a Dec 18 news conference after the Fed's last meeting. At the meeting, the Fed announced it would begin in January to reduce its monthly bond purchases from $85 billion to $75 billion, noting signs of an improving economy.

The bond purchases are intended to keep long-term interest rates low and encourage more borrowing and spending.

Friday's appearance was expected to be one of Bernanke's final speeches as Fed chairman. He is stepping down at the end of this month after eight years leading the central bank.

The Senate is expected to confirm Janet Yellen on Monday to be the next Fed chairman. She would take over on Feb. 1.

In his speech, Bernanke said that he tried to make the Fed more transparent and accountable while at the same time combating a deep recession and severe financial crisis.

Making the Fed more transparent was an important goal for him when he took over in 2006. He cited his participation in more television interviews, his efforts to hold more town hall meetings and his visits to universities. Bernanke also added a quarterly news conference after four of the Fed's eight policy meetings.

"We took extraordinary measures to meet extraordinary economic challenges and we had to explain those measures to earn the public's support and confidence," Bernanke said.

Bernanke said while the financial crisis has passed "the Fed's need to educate and explain will only grow."

Bernanke also used his speech to make some pointed remarks at Congress. He said "excessively tight" budget policies had been counterproductive.

"With fiscal and monetary policy working in opposite directions, the recovery is weaker than it otherwise would be," Bernanke said.

Bernanke also defended the central bank against critics who say the Fed's massive bond purchases have had little effect on jumpstarting the recovery.

"Economic growth might well have been considerably weaker, or even negative, without substantial monetary policy support," Bernanke said. He noted economic research that supported the benefits of the Fed's bond purchases.

In response to an audience question, Bernanke criticized legislation pending in Congress that would allow the Government Accountability Office to expand its audits of the Fed to look at decisions on interest rates. The GAO, the auditing arm of Congress, can currently conduct audits of the Fed. But it is prohibited from investigating its interest rate decisions.

Bernanke said passage of this legislation would be a bad idea because it would harm the Fed's independence. He said such independence is necessary to assure markets that the Fed is not being swayed by political interests.

FII inflows arrive at $2.5 billion in December

Foreign investors pumped in more than Rs 15,500 crore ($2.5 billion) in Indian equities this month, to the lead of the reduction of the US Federal Reserve's incentive programme preliminary in January.

Foreign institutional investors (FIIs) were foul buyers of shares merit Rs 61,492 crore and sellers of equities merit Rs 45,940 crore till December 27, ensuing in a net inflow of about Rs 15,553 crore ($2.51 billion), according to Sebi data.

As a result outlying in 2013, FIIs have invested Rs 1.13 lakh crore ($20 billion) in the conjugal stock market. There are motionless two trading days not here in the present month.

The US Federal preserve certain to get thinner its monthly acquaintance-exchange programme, raising concerns that resources obtainable for investing in rising markets would be summary.

Preparatory next month, the US central bank will hack its purchases of bonds to $75 billion from $85 billion, according to a proclamation after the Federal Open Market Committee assembly on December 18.

Analysts also said the Bharatiya Janata Party's wins in congregation polls in Rajasthan, Madhya Pradesh and Chhattisgarh had sparked hopefulness about its likelihood in the 2014 universal elections. The BJP also emerged as the solitary leading party in Delhi.

Some experts accept as true BJP prime ministerial candidate Narendra Modi's situation has been strengthened. They imagine a BJP-led government would be extra pro-reform and speed up lawmaking stepladder required to prompt monetary increase.

In adding up, out of the country investors infused a net amount of Rs 5,380 crore ($872 million) in the debt market so outlying this month. Since the start of 2013, they have inhibited Rs 50,758 crore ($8 billion).

As of December 27, the integer of registered FIIs in the country stand at 1,742 and the entirety integer of sub-accounts was at 6,399.

Indian rupee leads Asia forex gains against dollar

Singapore: The rupee led gains among emerging Asian currencies on Monday as investors cut bearish bets on regional units, with the dollar softer amid uncertainty over how long the US Federal Reserve will keep up its policy stimulus.

The rupee rose nearly 1 percent on demand from foreign banks.

The won strengthened to 1,057.8 per dollar in the local trade, its strongest since October 24. Against the yen, the won touched 10.5603, its highest since September 2008.

Exporters` bids led offshore and onshore investors to cover short positions to stop losses in the South Korean currency. The positions had been built up on caution over possible intervention, traders said.

The Malaysian ringgit gained as the economy picked up pace in the third quarter on resilient domestic demand and a recovery in exports.

The ringgit found more support from demand by oil exporters demand and stop-loss dollar selling.

The Indonesian rupiah, however, eased on month-end dollar demand from local corporates. The rupiah is the worst performing Asian currency this year.

Global central banks unlikely to fight dollar: Poll

London: Global central banks are unlikely to take steps to make their currencies more competitive against the US dollar whose current weakness should prove to be temporary, a Reuters poll found.

The monthly survey of more than 60 foreign exchange analysts and economists showed the euro - which soared above USD 1.38 before shock low inflation data last week - will ease gradually over the next 12 months from here.

That view reflects expectations the US Federal Reserve will start cutting its monthly bond purchase stimulus early next year, probably by March.

After the Fed surprised markets by refraining from doing that this September, major global currencies have strengthened against the dollar. That has caused problems for export-reliant countries, both in Europe and emerging markets.

Still, 28 out of 35 analysts who answered an extra question said the dollar`s weakness would not push world central banks to ease policy to help regain a competitive edge against the greenback.

"(That`s) unlikely, because Fed tapering is inevitable and thus most emerging market currencies will be vulnerable over the medium term," said Barclays analyst Mike Keenan.

But the dollar probably won`t rally soon. The poll showed the dollar index relative to a basket of major currencies closing the year at 81, compared with 80.5 on Wednesday.

Into next year, that should change.

For one thing, the euro`s strength will gradually dissipate next year. That will be at least some relief for the European Central Bank, which meets on Thursday to set policy and is under pressure to act against very weak inflation and boost fragile growth.

The poll`s median outlook showed the euro - which was trading around USD 1.35 on Wednesday - holding around that level in a month`s time, before slipping to USD 1.33 in three months, USD 1.30 in six and USD 1.27 in a year from now.

"We expect a near-term euro appreciation against the dollar given the likely continued U.S. fiscal uncertainties, followed by retrenchment in 2014 as the focus returns to growth and interest rate differentials," said Ric Deverell, head of global foreign exchange at Credit Suisse.

Against sterling, the euro looks set to keep its value for the most part, holding at 84 pence on Wednesday and forecast at 83 pence in a year`s time.

Sign in | Create a Rediffmail account Rediff.com » Business » Rajan meets PM, FM ahead of monetary review Rajan meets PM, FM ahead of monetary review

Days before his first monetary policy review, Reserve Bank of India (RBI) Governor Raghuram Rajan met Prime Minister Manmohan Singh and Finance Minister P Chidambaram on Tuesday. 
The meeting also comes at a time when the US Federal Reserve is expected to take a call on tapering of the bond-buying programme known as quantitative easing.
“RBI has constant consultations with the finance ministry. This meeting was part of that. We discussed a whole gamut of issues,” Rajan told reporters on Tuesday after meeting Chidambaram.
Later, during the day, the government hiked import duty on gold jewellery to 15 per cent from the existing 10 per cent in an effort to curb the spiralling current account deficit (CAD) that touched an all-time high of 4.8 per cent of the GDP in FY13.
A six-month high inflation in August has already made things tough for Rajan at a time when industry is demanding cut in the policy rate to boost growth.
Inflation rose 6.1 per cent in August from 5.8 per cent in July, driven by expensive food items, particularly onions, which saw the rate of price rise skyrocketing to 244.6 per cent from an already high 119.4 per cent.
According to a report by Dun and Bradstreet, RBI is expected to maintain a status quo on the policy rate. Ironically, onion prices can’t be brought down by interest rate policy.
However, that may desist Rajan from easing the central bank’s monetary stance in the mid-quarter review on the 20th of this month, economists said.
India’s economic growth crashed to a four-year low of 4.4 per cent in the first quarter of 2013-14.
On the other hand, inflation in manufactured products further fell to 1.9 per cent from 2.81 per cent, despite depreciation of the rupee, increasing imported inflation. This showed that demand in the Indian and global economy remained subdued.
Usually, it is manufactured product inflation on which RBI focuses its attention; it is core inflation within manufactured item inflation that RBI is usually concerned.
The core inflation relates to manufactured items sans food articles. It fell further to 1.9 per cent in August from 2.3 per cent.
The low rate of price rise in manufactured items and core inflation should have been ideal conditions for RBI to cut rates, but the party is being spoilt by food articles.

Gold falls below $1,300 as Fed stimulus decision looms

Singapore: Gold extended losses into a third session on Wednesday, falling over 1 percent to trade below USD 1,300 an ounce, with investors expecting the US Federal Reserve to announce a reduction in its bullion-friendly stimulus measures.

The Fed is expected to begin its long retreat from ultra-easy monetary policy by announcing a small reduction to its USD 85 billion monthly bond purchases following a two-day policy meeting that ends on Wednesday. Many expect a USD 10 billion cut.

Spot gold had fallen 1.2 percent to USD 1,293.69 an ounce by 0217 GMT, bringing the year's losses to 23 percent. It had earlier dropped to USD 1,291.34 - its lowest since August 8.

"It all dependent now on the FOMC," said a precious metals trader in Hong Kong, referring to the Federal Open Market Committee. "It depends on what the language is going to be on their stimulus and what sort of tapering they pursue."

"Gold is still technically under pressure and will probably struggle to go above USD 1,350 again."

Traders said prices would find their next support level at USD 1,270- USD 1,280 an ounce.

Gold, often seen as a hedge against inflation and a slowing economy, benefited when central banks around the world launched stimulus measures to support their economies. The metal hit an all-time high of about $1,920 an ounce in 2011.

But this year several analysts have cut their forecasts for gold prices in anticipation of the US central bank curbing its stimulus measures. Goldman Sachs expects prices to drop to USD 1,050 by the end of next year.

PHYSICAL DEMAND

Due to the volatility in prices, physical demand has failed to pick up rapidly in key consumers India and China. Expectations that prices could fall further once the Fed announces a cut in stimulus have also restrained purchases.

Shanghai gold futures fell 2 percent on Wednesday.

Top gold consumer India increased its import duty on gold jewellery to 15 percent from 10 percent, setting it higher than the duty on raw gold in a move to protect the domestic jewellery industry.

The Indian central bank and finance ministry have taken several steps this year to curb bullion imports in an effort to reduce the country's record trade deficit.

Silver and palladium dropped about 1.6 percent, while platinum fell nearly 1 percent.

G20 Summit: PM leaves for St.Petersburg

New Delhi: Prime Minister Manmohan Singh on Wednesday left for St.Petersburg to attend the eighth G20 Summit during which he is expected to push for a coordinated plan to avoid disruption in India and other large developing economies by imminent phasing out of fiscal stimulus by US Federal Reserve.

While the dispute between Russia and the US over the conflict in Syria is likely to overshadow the two-day summit starting tomorrow in the Russian city, splits between emerging markets and the US over its winding down of stimulus and the slowing growth of India and other four BRICS countries are expected to remain in focus.

Brazil, India, Russia, China and South Africa--grouped in the informal BRICS bloc seen as an alternative economic powerhouse--all go into the meeting experiencing slowing growth, embattled currencies and huge capital outflows.

In a statement before leaving for the Summit, Singh called for an "orderly exit" from unconventional monetary policies being pursued by the developed world for the last few years to avoid damaging growth prospects of the developing world.

Singh, who has attended all the previous G20 summits since the first meet in Washington in 2008, is due to return home on Saturday evening.