Bond Prices Decrease In Advance Of Auction - July 31, 2009

The bond prices slipped by around 50 paise, ahead of the auction of government securities, which is scheduled on Friday. RBI is scheduled to auction government securities of Rs 12,000 crore this week. As per the statement by the Reserve Bank''s Governor that RBI will by and large stick to the OMO calendar that dampened market sentiments, said a dealer with a private bank.

The total traded volumes on the order matching system were at Rs 5,925 crore. The 6.90 per cent-10 year-2019 paper opened at Rs 9 9.90 (6.91 per cent YTM) and slipped to close at Rs 99.47 (6.97 per cent YTM) as against the previous close of Rs 99.95 (6.91 per cent YTM).

Moreover, the 7.94 per cent-12 year-2021 paper opened at Rs 105.65 (7.21 per cent YTM) and closed at Rs 105.20 (7.27 per cent YTM).

Gold Remains Down On Global Cues Of Passive Demand - July 31, 2009

Being in a loss for the second straight session, due to weak global trend, gold prices on July 30 fell by another Rs 120 to Rs 14,870 per ten gram followed by silver which recorded a steep fall of Rs 300 to Rs 22,100 per kg. However, traders said that after the metal''s fall to 924.60 dollar an ounce last evening, investor sentiments in gold remained weak as the dollar firmed against the euro fading demand for the metal as an alternative investment.

Additionally, they said fall in demand at higher levels and shifting of funds from bullion to rising equity markets also weighed on the gold prices in domestic markets.

However, standard gold and ornaments fell by Rs 120 each to Rs 14,870 and Rs 14,720 per ten gram respectively, while sovereign declined by Rs 25 to 12,450 per piece of eight gram.

Precious Metals Gather Round Some Shine - July 31, 2009

Precious metal prices rose on Thursday, 30 July, 2009. Prices shone today as the rebounding crude price and weak dollar increased the appeal of precious metals as a hedge against inflation. Generally, a stronger dollar pressures demand for dollar-denominated commodities, such as crude oil and gold, which become more expensive for holders of other currencies and also vice versa.

On Thursday, gold for August delivery ended at $934.9, higher by $7.7 (0.8%) an ounce on the New York Mercantile Exchange. Last week, gold ended higher by 1.6%. Year to date, gold prices are higher by 5.5%.

For the month of June, 2009, gold ended down by 5.4%. Gold had ended the month of May higher by 9.8%.

It was the highest monthly gain registered by gold in six months. For the second quarter, gold ended higher by 0.5%. The metal had gained 4.3% in the first quarter of this year.

On 17 March, 2008 prices had skyrocketed to a high of $1,034/ounce. But prices have dropped somewhat (11.5%) since then.

On Thursday, Comex silver futures for September delivery gained 48.2 cents (3.5%) at $13.258 an ounce. Last week, silver ended higher by 3.5%.

Silver ended 13% down for the month of June, 2009. For the month of May, silver gained 26.6%. It was the biggest monthly gain for silver in more than two decades.

For second quarter, silver rose 4.5%. Year to date, silver has climbed 21.7% this year. For 2008, silver had lost 24%.

In the currency market on Thursday, the dollar index, a six-currency gauge of the greenback's value, rose modestly.

In the crude market, crude prices rose in synchronization with US stocks.

In 2008, gold prices ended higher by 5.5%. The dollar index had gained 12% that year.

At the MCX, gold prices for October delivery closed higher by Rs 45 (0.3%) at Rs 14,696 per 10 grams.

Prices rose to a high of Rs 14,715 per 10 grams and fell to a low of Rs 14,631 per 10 grams during the day's trading.

At the MCX, silver prices for September delivery closed Rs 274 (1.25%) higher at Rs 22,153/Kg. Prices opened at Rs 21,945/kg and rose to a high of Rs 22,238/Kg during the day's trading.

Precious Metals Go On All Sides Of Paler - July 30, 2009

Precious metal prices fell on Wednesday, 29 July, 2009. The strong dollar was mainly responsible for this. Generally, a stronger dollar pressures demand for dollar-denominated commodities, such as crude oil and gold, which become more expensive for holders of other currencies and also vice versa.

On Wednesday, gold for August delivery ended at $927.2, lower by $11.9 (1.3%) an ounce on the New York Mercantile Exchange. Last week, gold ended higher by 1.6%. Year to date, gold prices are higher by 4.7%.

For the month of June, 2009, gold ended down by 5.4%. Gold had ended the month of May higher by 9.8%.

It was the highest monthly gain registered by gold in six months. For the second quarter, gold ended higher by 0.5%. The metal had gained 4.3% in the first quarter of this year.

On 17 March, 2008 prices had skyrocketed to a high of $1,034/ounce. But prices have dropped somewhat (11.5%) since then.

On Wednesday, Comex silver futures for September delivery lost 48 cents (3.5%) at $13.26 an ounce. Last week, silver ended higher by 3.5%.

Silver ended 13% down for the month of June, 2009. For the month of May, silver gained 26.6%. It was the biggest monthly gain for silver in more than two decades.

For second quarter, silver rose 4.5%. Year to date, silver has climbed 18.2% this year. For 2008, silver had lost 24%.

In the currency market on Wednesday, the dollar index, a six-currency gauge of the greenback's value, rose by more than 0.7%.

The euro fell by more than 1% against the dollar. In 2008, gold prices ended higher by 5.5%. The dollar index had gained 12% that year.

At the MCX, gold prices for August delivery closed lower by Rs 90 (0.6%) at Rs 14,651 per 10 grams.

Prices rose to a high of Rs 14,750 per 10 grams and fell to a low of Rs 14,618 per 10 grams during the day's trading.

At the MCX, silver prices for September delivery closed Rs 517 (2.3%) lower at Rs 21,879/Kg. Prices opened at Rs 22,336/kg and fell to a low of Rs 21,758/Kg during the day's trading.

Inflation By The Side Of Quarters Negative Zone - July 30, 2009

The official Wholesale Price Index for all commodities for the week ended 18th July 2009 rose by 0.04% to 236.8 from 236.7 for the previous week. The annual rate of inflation, calculated on point-to-point basis, stood at -1.54% for the week ended 18 July 2009 compared with 19 July 2008. India's WPI is constantly moving in negative zone, thanks to the higher base effect. However the trend is expected to reverse in near term with lower base effect setting in.

The index for primary article rose by 0.3% to 261.1 from 260.3 for the previous week. In primary article index, 'Food Articles' group index rose by 1.2% to 259.0 from 255.9 for the previous week due to higher prices of mutton (14%), arhar (9%), gram (4%), moong, jowar, fruits & vegetables and masur (3% each), bajra and urad (2% each) and maize and ragi (1% each). However, the prices of condiments & spices (1%) declined.

The index for 'Non-Food Articles' group rose by 1.7% to 242.5 from 238.4 for the previous week due to higher prices of logs & timber (35%), copra (3%), raw silk (2%) and rape & mustard seed, raw cotton and gingelly seed (1% each). However, the prices of sunflower (1%) declined.

The index for 'Minerals' group declined by 16.8% to 561.7 from 675.4 for the previous week due to lower prices of iron ore (24%) and felspar (3%).

However, the prices of vermiculite (86%), manganese ore (77%), silica sand (4%) and barytes (2%) moved up.

The index for fuel and power declined by 0.1% to 338.2 from 338.4 for the previous week due to lower prices of aviation turbine fuel (7%).

The index for manufactured group declined by 0.1% to 205.7 from 205.9 for the previous week. The index for 'Food Products' group declined by 0.4% to 232.1 from 233.0 for the previous week due to lower prices of oil cakes (3%) and cotton seed oil (1%).

However, the prices of imported edible oil (4%) and rice bran oil, coconut oil, sugar, butter, ghee and gur (1% each) moved up.

The index for 'Beverages Tobacco & Tobacco Products' group rose marginally to 304.4 from 304.3 for the previous week due to higher prices of soft drinks (all kinds) (1%).

The index for 'Textiles' group declined by 0.2% to 143.4 from 143.7 for the previous week due to lower prices of hessian cloth (3%) and hessian & sacking bags (2%).

The index for 'Chemicals & Chemical Products' group rose marginally to 227.1 from 227.0 for the previous week due to higher prices of acid (all kinds) (1%).

The index for 'Non-Metallic Mineral Products' group declined by 0.1% to 222.5 from 222.8 for the previous week due to marginal decline in the prices of cement.

The index for 'Basic Metals Alloys & Metal Products' group rose marginally to 255.1 from 255.0 for the previous week due to higher prices of foundry pig iron and basic pig iron (1% each). However, the prices of other iron steel, steel ingots and lead ingots (1% each) declined.

The WPI inflation turned negative in June 2009 due to the statistical base effect and not because of any contraction in demand.

Within WPI, inflation of primary articles, particularly food articles, are continuously rising, recording a growth of 8.57% in June 2009 over 5.94% in June 2008.

Moreover consumer price indices (CPIs) are at elevated levels, indeed have also hardened in recent months.

Growing demand and concern on supply has resulted into higher prices of essential commodities. This has again raised the expectations of rise in inflation.

In recent policy review, RBI has projected 5% inflation for end –March 2010 that is higher then 4% projected in the Annual Policy meet on 21 April 2009.

Moving further, the rising commodity prices globally and the uncertain monsoon outlook could further accentuate food price inflation.

Rupee Fall Down 21 Paise, Split Ends At 48.30 - July 30, 2009

The rupee on Wednesday tumbled by 21 paisa against the US dollar amid expectations of fresh capital outflows and month end dollar demand due to the weakness in the local equity markets. In active trade at Interbank Foreign Exchange market, the rupee resumed lower at 48.30/31 per dollar as against its previous close of 48.20/21 a dollar. Reflecting a steep decline in the local equity markets, the domestic currency later hit a low of 48.52.

The BSE Sensex was down by a whopping nearly 444 points in late morning deals after China''s stock dipped most in eight months on concerns over the prospects of earnings growth.

However, at a later stage, it recovered to close lower by 158.48 points. Tracking this, the rupee also bounced back to close at 48.41/42. It touched a high of 48.26 a dollar.

However, the Reserve Bank of India (RBI) fixed the reference rate for the US dollar at Rs 48.47 while for the euro at Rs 68.45.

The rupee premiums on the forward dollar closed steady to slightly better on stray paying pressure from corporates and banks.

The benchmark six-month forward dollar premium payable in December closed hardly changed at 46-1/2-48-1/2 paise from 46-48 paise on Tuesday and the far-forwards maturing in June also shot up to 96-1/2 to 98-1/2 paise from 96-98 paise previously.

However, the rupee remained weak against the Japanese yen. The rupee shot up against the pound to close at Rs 79.22/24 from Rs 79.58/60 but it strengthened against the euro to Rs 68.34/36 from Rs 68.72/74.

Further, it eased against the Japanese yen to Rs 50.93/95 per 100 yen from Rs 50.84/86 previously.

Govt Have Access To May Disappoint Private Sector - July 29, 2009

According to the Reserve Bank of India (RBI), the higher government borrowings resulting the higher bond yields might upset the private sector. The reason behind the RBI’s statement is that the higher bond yields had militated against the low interest regime required to encourage private sector investments.

This is the first statement from the central bank accepting the adverse impact of such borrowings.

The yield on the 10-year government paper has moved up from 6.81 per cent on the eve of the Union Budget, announced earlier this month, to 6.94 per cent at the close of trading on 28th July.

However, the central bank maintained that various tools available with it in the form of open market operations (OMOs) and redemption of market stabilization scheme (MSS) bonds have ensured adequate liquidity in the banking system.

Meanwhile, the central bank also stated that it has enough headroom to ensure that the borrowing programme was carried out easily.

Precious Metals Go Round Unexciting - July 29, 2009

Falling crude price and strengthening dollar took their toll on precious metals on Tuesday, 28 July, 2009. Crude prices slipped for the first time after four consecutive sessions of rise. On the other hand, weak consumer confidence data strengthened the dollar. These factors reduced the appeal of precious metals as a hedge against inflation. Generally, a stronger dollar pressures demand for dollar-denominated commodities, such as crude oil and gold, which become more expensive for holders of other currencies and also vice versa.

On Tuesday, gold for August delivery ended at $939.1, lower by $14.40 (1.5%) an ounce on the New York Mercantile Exchange. Last week, gold ended higher by 1.6%. Year to date, gold prices are higher by 6%.

For the month of June, 2009, gold ended down by 5.4%. Gold had ended the month of May higher by 9.8%.

It was the highest monthly gain registered by gold in six months. For the second quarter, gold ended higher by 0.5%. The metal had gained 4.3% in the first quarter of this year.

On 17 March, 2008 prices had skyrocketed to a high of $1,034/ounce. But prices have dropped somewhat (10%) since then.

On Tuesday, Comex silver futures for September delivery lost 25 cents (1.8%) at $13.74 an ounce. Last week, silver ended higher by 3.5%.

Silver ended 13% down for the month of June, 2009. For the month of May, silver gained 26.6%. It was the biggest monthly gain for silver in more than two decades.

For second quarter, silver rose 4.5%. Year to date, silver has climbed 21.7% this year. For 2008, silver had lost 24%.

In the currency market on Tuesday, the dollar index, a six-currency gauge of the greenback's value, rose by more than 0.4%. The dollar strengthened on weak consumer confidence data.

The Conference Board reported on Tuesday, 28 July, 2009 that consumer confidence took its second consecutive monthly drop in July, 2009.

The index dropped to 46.6 in July from an unrevised 49.3 in June. In May, the confidence gauge stood at 54.8.

The confidence measure was worse than expected. Market was expecting confidence to dip to 48 in July from the June reading.

In 2008, gold prices ended higher by 5.5%. The dollar index had gained 12% that year.

At the MCX, gold prices for August delivery closed lower by Rs 186 (1.2%) at Rs 14,755 per 10 grams. Prices rose to a high of Rs 14,962 per 10 grams and fell to a low of Rs 14,715 per 10 grams during the day's trading.

At the MCX, silver prices for September delivery closed Rs 331 (1.5%) lower at Rs 22,396/Kg. Prices opened at Rs 22,750/kg and fell to a low of Rs 22,258/Kg during the day's trading.

Rupee Cuts 3 Sessions Of Rise Cataract Of 4 Paise - July 29, 2009

The Indian rupee on July 28 fell by four paise against the dollar on account of month-end demand for the US currency as well as weakness in local equity markets. At the Interbank Foreign Exchange market, the rupee resumed lower at 48.23/24 a dollar from its overnight close of Rs 48.16/17 a dollar. The forex dealers said that importers, mainly oil refiners, were seen purchasing dollars for their month-end import payments putting some pressure on the rupee.

The rupee later moved in a range of 48.13 and 48.3050 a dollar before closing at 48.20/21. The Indian benchmark Sensex ended lower by 43.10 points or 0.28 per cent.

Moreover, the dealers further added that the investors remained sidelined ahead of the announcement of the RBI''s quarterly monetary policy review.

But after the announcement, the dealers termed it a non-event as the Central bank kept the key interest rates unchanged and increased the inflation forecast to five per cent by end March 2010 from earlier four per cent.

Precious Metals Last Part Marginally Higher - July 28, 2009

Precious metal prices ended little higher on Monday, 27 July, 2009. It was a day of volatile trading for precious metals as prices swung between gains and losses. The dollar managed to gain back some of its lost ground. Generally, a stronger dollar pressures demand for dollar-denominated commodities, such as crude oil and gold, which become more expensive for holders of other currencies and also vice versa.

On Monday, gold for August delivery ended at $953.5, higher by $0.40 (0.04%) an ounce on the New York Mercantile Exchange. Last week, gold ended higher by 1.6%. Year to date, gold prices are higher by 7.44%.

For the month of June, 2009, gold ended down by 5.4%. Gold had ended the month of May higher by 9.8%.

It was the highest monthly gain registered by gold in six months. For the second quarter, gold ended higher by 0.5%. The metal had gained 4.3% in the first quarter of this year.

On 17 March, 2008 prices had skyrocketed to a high of $1,034/ounce. But prices have dropped somewhat (10%) since then.

On Monday, Comex silver futures for September delivery rose 11.5 cents (0.9%) at $13.99 an ounce. Last week, silver ended higher by 3.5%.

Silver ended 13% down for the month of June, 2009. For the month of May, silver gained 26.6%. It was the biggest monthly gain for silver in more than two decades.

For second quarter, silver rose 4.5%. Year to date, silver has climbed 23.5% this year. For 2008, silver had lost 24%.

In the currency market on Monday, the dollar index, a six-currency gauge of the greenback's value, gained back some of its lost ground and rose mildly higher.

In 2008, gold prices ended higher by 5.5%. The dollar index had gained 12% that year.

At the MCX, gold prices for August delivery closed higher by Rs 41 (0.27%) at Rs 14,941 per 10 grams. Prices rose to a high of Rs 14,972 per 10 grams and fell to a low of Rs 14,897 per 10 grams during the day's trading.

At the MCX, silver prices for September delivery closed Rs 200 (0.88%) higher at Rs 22,727/Kg. Prices opened at Rs 22,550/kg and rose to a high of Rs 22,820/Kg during the day's trading.

Reserve Bank Of India Plant Life Explanation Rates Unmoved - July 28, 2009

The RBI on Tuesday kept the key policy rates unchanged but increased the inflation forecast to 5 per cent. RBI kept the repo rate, at which the central bank lends cash to banks, at 4.75 per cent and the reverse repo rate, at which it absorbs surplus cash from the banking system, stays at 3.25 per cent, according to the Q1 Monetary Policy. Moreover, the RBI also kept the cash reserve ratio unchanged at 5.00 percent.

The deposit growth is seen at 19 per cent and the review has said that there is scope for the banks to slash interest rates. The SLR also remains unchanged at 24 per cent.

The GDP is expected to grow at 6 per cent while the money supply growth is seen at 18 per cent, according to the quarterly review of the economy.

Since October, RBI has cut its short-term lending rate by 425 basis points in six steps. The RBI also slashed the reverse-repo rate by 275 basis points since early December and reduced the cash reserve requirement by 400 basis points to 5 percent to keep credit flowing.

RBI Inspection Projects Higher Growth Of 6.5 Per Cent In 2009-10 - July 28, 2009

Most recent round of professional forecasters’ survey of the Reserve Bank of India (RBI) has projected the country’s overall growth rate advanced at 6.5 per cent for 2009-10. However, growth rate was projected at 5.7 per cent in the previous survey.

The RBI’s Report on Macroeconomic and Monetary Developments: First Quarter Review for 2009-10 was released on Monday on the eve of the first quarter Review of the Monetary Policy.

However, the report warned that there are indications of inflation firming up by the end of the year.

It attributed price pressures to the waning base effect of last year, increase in commodity prices, delayed progress of monsoon potentially increasing food prices, and the inflationary implications of expansionary fiscal and monetary policies.

Meanwhile, the sectoral growth rate for the agriculture sector amid the delayed monsoon, has been revised downwards at 2.5 per cent (against 3 per cent in the last survey), the forecast for the industry and services sectors was revised upwards to 4.8 per cent (4.1 per cent) and 8.3 per cent (7.5 per cent), respectively.

Reserve Bank Of India May Leave Policy Rates Unchanged - July 27, 2009

The central bank is likely to keep rates on hold at its policy review on Tuesday, 28 July 2009, due to a surplus liquidity in the banking system and on low demand for credit. The central bank is also likely to lay out a more clear roadmap to conduct the government borrowing programme in a smooth manner and may hike the GDP and inflation forecast for the year ending March 2010 (FY 2010).

Ahead of the review, the RBI will also release the macroeconomic and monetary developments during the quarter ended June 2009.

The Reserve Bank of India (RBI) cut the repo rate, or its key short-term lending rate, by 425 basis points to 4.75% in six steps since October 2008 as it tried to guard a slowing economy against the global financial crisis.

The central bank also slashed the reverse-repo rate by 275 basis points since early December 2008 and brought down the cash reserve requirement (the proportion of deposits that banks set aside), by 400 basis points to 5% since early October 2008 to keep credit flowing.

the government's stimulus measures late last year to counter slowdown in domestic economy have started to bear fruits.

The latest economic data indicated improving economic activity. The six infrastructure industries -- crude oil, refining, coal, electricity, cement and steel -- together grew at an annual rate of 6.5% in June 2009, faster than the previous month's rise of 2.8%, data showed on Thursday, 23 July 2009. The infrastructure sector accounts for 26.7% of India's industrial output.

Inflation based on the wholesale price index declined 1.17% in the year through 11 July 2009, compared to previous week's fall of 1.21%, data released by the government showed on Thursday, 23 July 2009.

Precious Metals Observer Diverse Closing Stages - July 27, 2009

Precious metal prices ended mixed on Friday, 24 July, 2009. Gold prices ended lower for the day while silver rose. The dollar remained relatively steady against its counterparts. Generally, a stronger dollar pressures demand for dollar-denominated commodities, such as crude oil and gold, which become more expensive for holders of other currencies and also vice versa.

On Friday, gold for August delivery ended at $953.1, lower by $1.7 (0.2%) an ounce on the New York Mercantile Exchange. For the week, gold ended higher by 1.6%. Year to date, gold prices are higher by 7.4%.

For the month of June, 2009, gold ended down by 5.4%. Gold had ended the month of May higher by 9.8%.

It was the highest monthly gain registered by gold in six months. For the second quarter, gold ended higher by 0.5%. The metal had gained 4.3% in the first quarter of this year.

On 17 March, 2008 prices had skyrocketed to a high of $1,034/ounce. But prices have dropped somewhat (10%) since then.

On Friday, Comex silver futures for September delivery rose 11 cents (0.8%) at $13.88 an ounce. For the week, silver ended higher by 3.5%.

Silver ended 13% down for the month of June, 2009. For the month of May, silver gained 26.6%. It was the biggest monthly gain for silver in more than two decades.

For second quarter, silver rose 4.5%. Year to date, silver has climbed 22.6% this year. For 2008, silver had lost 24%.

In the currency market on Friday, the dollar index, a six-currency gauge of the greenback's value, rose mildly higher.

In 2008, gold prices ended higher by 5.5%. The dollar index had gained 12% that year.

RBI Likely To Maintain Status Quo On Tuesday - July 27, 2009

Looking at inflation at subzero level, the Reserve Bank of India (RBI) is unlikely to go for any cut in key short- term lending as well as borrowing rates and cash reserve ratio (CRR) in the quarterly annual monetary policy review scheduled on Tuesday. The governor of Reserve Bank of India, D Subbarao met Prime Minister Manmohan Singh and Finance Minister Pranab Mukherjee, as part of the pre-policy consultations, on Friday.

The bankers felt that any cut in key-rates at this stage would serve no purpose as there was already surplus liquidity in the system.

Moreover, a still low demand for credit might also prompt the Reserve Bank to maintain a status-quo in its key rates, the bankers said.

Besides this, the Central bank may lay out a clearer roadmap to conduct the Government borrowing programme in a smooth manner and may increase the GDP and inflation forecast for FY10, bankers said.

Public Private Partnership Street Projects Get Govt Clearance - July 25, 2009

The Government on Friday cleared 15 road projects totaling Rs 15,560 crore to be build under the Public Private Partnership (PPP) mode in eleven states. The 25th Public Private Partnership Appraisal Co-mmittee (PPPAC) meeting, chaired by the finance secretary, Mr Ashok Chawla, approved these projects spread over 11 states.

Since January 2006, a panel under the finance ministry has approved 116 projects worth Rs 1,15,000 crore under the public-private partnership mode.

The UPA government is giving a major thrust to the infrastructure sector in an attempt to remove bottlenecks in the Indian infrastructure and boost the economy, which is hit by slowdown.

As per government estimates, the country needs at least $500 billion during the 11th Five Year Plan period to meet the funding needs of infrastructural development.

Gold Continues To Fall Over As Dollar Increase Losses - July 25, 2009

Gold futures continued to tumbled in the mid day London trades today as the US dollar started minimizing the losses against the single currency. August gold futures are expected to open floor trading in New York around $2 an ounce lower Friday, based on electronic activity ahead of the pit session at the Comex division of the New York Mercantile Exchange. In other markets that have the potential to impact metals in the short term, the euro is up to $1.4246 from $1.4203 late Thursday afternoon.

In screen trading ahead of the pit open, the September S&P 500 futures are up 1.90 points to 970.80.

The lone U.S. economic report on the calendar for Friday is the University of Michigan consumer-sentiment index at 9:55 a.m. EDT (1355 GMT).

An ounce of gold on the COMEX division of the New York Mercantile Exchange is down $ 2.6 at $ 952.2 per ounce. The $954 levels is a very crucial level for gold today.

Comex gold warehouse stocks were up 214,217 ounces at 9,136,535 ounces Thursday, while silver stocks were down 117,180 ounce

The data released so far today from Europe, that the two closely watched business confidence surveys rose more than forecast in July, while U.K. GDP contracted 5.6% annually in the second quarter.

The euro rallied against the British pound and also rose vs. the U.S. dollar on the news. The University of Michigan's consumer confidence gauge is due for release

GDP shrank by 0.8% in the second quarter, the Office for National Statistics said, in a preliminary estimate.

Compared to the same period last year, output fell by 5.6% -- the largest annual decline since current records began in 1955, the ONS said. British pound fell immediately after the data came in, pound is down 0.6% to 1.6415 per US dollar.

MCX upfront month contract is down Rs 30 at Rs 14890 per 10 grams. The counter stayed below the 14925 levels mentioned in the morning update. It may find support near Rs 14865 and 14800 levels.

Precious Metals Prepare Near The Beginning Losses - July 24, 2009

Precious metal prices coughed up earlier losses and ended higher on Thursday, 23 July, 2009. Prices rose today in synchronization with US stocks and also as the dollar retreated. Generally, a stronger dollar pressures demand for dollar-denominated commodities, such as crude oil and gold, which become more expensive for holders of other currencies and also vice versa.

On Thursday, gold for August delivery ended at $954.8, higher by $1.5 (0.2%) an ounce on the New York Mercantile Exchange.

Earlier it reached a high of $957.5. Last week, gold ended higher by 2.7%. Year to date, gold prices are higher by 7.6%.

For the month of June, 2009, gold ended down by 5.4%. Gold had ended the month of May higher by 9.8%.

It was the highest monthly gain registered by gold in six months. For the second quarter, gold ended higher by 0.5%. The metal had gained 4.3% in the first quarter of this year.

On 17 March, 2008 prices had skyrocketed to a high of $1,034/ounce. But prices have dropped somewhat (10%) since then.

On Thursday, Comex silver futures for September delivery rose 10 cents (0.8%) at $13.8 an ounce.

Silver ended 13% down for the month of June, 2009. For the month of May, silver gained 26.6%. It was the biggest monthly gain for silver in more than two decades.

For second quarter, silver rose 4.5%. Year to date, silver has climbed 21.8% this year. For 2008, silver had lost 24%.

In the currency market on Thursday, the dollar index, a six-currency gauge of the greenback's value, fell marginally paring early gains.

At Wall Street today, U.S. equities rose, sending the Dow Jones Industrial Average above 9,000 for the first time since January, after some companies reported earnings that topped analysts' estimates and home resales increased more than forecast.

In 2008, gold prices ended higher by 5.5%. The dollar index had gained 12% that year.

At the MCX, gold prices for August delivery closed lower by Rs 19 (0.13%) at Rs 14,920 per 10 grams.

Prices rose to a high of Rs 14,993 per 10 grams and fell to a low of Rs 14,901 per 10 grams during the day's trading.

At the MCX, silver prices for September delivery closed Rs 43 (0.19%) higher at Rs 22,433/Kg. Prices opened at Rs 22,420/kg and rose to a high of Rs 22,579/Kg during the day's trading.

Rupee Be Glad About Marginally Against US Dollar - July 24, 2009

The Indian rupee on July 23 rose by 7.50 paise to close at 48.4450/4550 against the US currency mostly on account of a smart rise in equity markets amid a weak dollar overseas. At the Interbank Foreign Exchange market, the rupee resumed higher at 48.40/42 a dollar against Wednesday''s close of 48.52/53.

The rupee later it moved in a range of 48.32 and 48.50 per dollar before concluding the day at 48.4450/4550 and the rupee gained momentum due to a smart rebound in the Indian Benchmark Sensex, which surged by 387.92 points or 2.61 per cent.

The Asian indices also displayed a firm trend at close on Thursday. Also the weakness of dollar against the major world currencies also aided rupee sentiment.

The expectation of increased capital inflows in the capital markets after firm trends in local equity markets also boosted rupee sentiment.

As per the Sebi data, in the last seven days, the capital inflows amounted to $12.30 million.

However, the Reserve Bank of India fixed the reference rate for the US dollar at Rs 48.44 while for the euro at Rs 69.07.

The rupee premiums on the forward dollar closed further lower. The benchmark six-month forward dollar premium payable in December closed at 47-1/2-49 paise, down from 49-51 paise on Wednesday while the far-forwards maturing in June also ended lower at 97-1/2-99 paise from 100-102 paise previously.

RBI Expected To Put Down Key Rates Untouched - July 24, 2009

Surplus liquidity in the banking system and low demand for credit may prompt the Reserve Bank of India (RBI) to maintain a status-quo in its key rates. In the quarterly review of its annual monetary policy, the central bank is also expected to put down a clearer roadmap to conduct the government-borrowing programme in a proper way. It may also hike the GDP and inflation forecast for FY''10.

Uco Bank CMD S K Goel said that there is enough liquidity in the banking system, even though, they may keep headroom to lower the cash reserve ratio (CRR) and any cut is doubtful in the current policy. Hence, it may leave the repo and reverse repo rates unchanged.

Additionally, he said that given the difficult market conditions, the apex bank might relax the NPA norms for stress-ridden sectors and extend the deadline for loan restructuring.

The possibility of hiking the SLR (statutory liquidity ratio) requirement of banks to 25% from the current 24% cannot be completely ruled out.

Since October last year, in order to arrest the slowdown in the economy by stimulating demand the apex bank has trimmed its CRR to 5%, repo and reverse repo rates to 4.75% and 3.25% respectively.

Govt Short-Term Tax Clear Up Get Higher On 3.65 Per Cent - July 23, 2009

High base effect and refunds have brought down the net direct tax collection growth to 3.65% to Rs 59,465 crore during the first quarter of the current financial year as against the direct tax collection which comprises of corporate and personal income tax, stood at Rs 57,373 crore during the April-June period the previous year.

Therefore, tax payers received Rs 17,600 crore, representing 52.01% growth over Rs 11,578 crore given in the first three months of the previous financial year.

Additionally, lower growth in net tax collection was primarily due to the higher tax refund outgo, hence, corporate tax collected during the period was also 3.31% higher at Rs 35,709 crore as compared to Rs 34,566 crore against the corresponding period last year.

However, in the personal income tax division, which includes Fringe Benefit Tax (FBT) and Securities Transaction Tax, the government collected Rs 24,564 crore, higher by 4.38% compared to last year.

The FBT collections recorded a negative growth of 7.56%. Hence, the Finance Minister proposed to abolish the tax.

Additionally, STT mop up fell 9.9% to Rs 1,462 crore in the first quarter of this financial year depicting decrease in trade at the bourses while, the net tax collection during the month of June was up marginally at Rs 35,307 crore compared to the last fiscal.

In the meantime, the government''s tax collections by way of Tax Deduction at Source recorded a growth of 12.1% in corporate TDS at Rs 19,584 crore while personal income tax TDS growth was 12.4% during the first quarter at Rs 21,188 crore as compared to last year.

The direct tax collections of the government are likely to grow by 9.2% at Rs 3, 69,575 crore during the current fiscal against Rs 3, 38,212 crore collected last fiscal.

Rupee Fall Down In Line By Means Of The Sensex - July 23, 2009

Following the equity markets, the rupee closed lower by 10 paise against the US currency. In fairly active trade at the Interbank Foreign Exchange market, the rupee resumed at 48.38/40 a dollar from previous close of 48.42/44 and improved further to a high of 48.25 on account of a smart rise of nearly 307 points in the morning deals.

The forex dealers said that there was selling pressures of dollars from the exporters in early trade as the US currency was lower in Asia in the morning after Federal Reserve Chairman Ben Bernanke expressed a cautious view about the US economy that helps the rupee to recover losses.

However, a sudden bout of selling in equities weighed on the rupee and it fell to 48.63 per dollar. Later it later settled at 48.52/53 a dollar. The rupee closed down by 22 paise on Tuesday.

India Information Fall In Foreign Direct Investments Ranking - July 23, 2009

This year, India has slipped to third place in global foreign direct investments (FDI) due to the economic meltdown. However, the country will continue to remain among the top five attractive destinations for international investors during the next two years, says Unctad (United Nations Conference on Trade and Development) in a new report on world investment prospects.

India was ranked second in global FDI flows after China during last year. However, China continues in the top place and the US went up to second place this year due to rise in investments by Chinese and Indian companies as they acquired some sick American firms.

Still, FDI prospects for India remain buoyant, says James Zhan, a senior Unctad official and one of the authors of the latest report.

He suggested that the Bric countries will hog most of the investment flows once FDI growth starts picking up after 2010.

Interest Rate Futures Instrument To Hedge The Risk - July 22, 2009

As of now, Interest rate futures only banks have been permitted for in India, but there are lots of indications that the coverage of participants will be enhanced in due course. The credit crisis in the year 2008 has substantially increased the risk in global interest markets. In India, interest rates have been highly volatile in the last 12-18 months. There is a growing need for mitigating interest rate risk using an effective and efficient mechanism.

In this perspective, the book, ‘A guide to interest rate futures' published by MCX stock exchange, part of listed entity Financial Technologies (India) is aimed at developing awareness and understanding of the concepts and contemporary market practice of using Exchange traded interest rate futures for mitigating interest rate risk.

During the crisis, banks and financial institutions have failed but not exchange. It shows the reliability of regulator.

Inflation, government borrowing, company expansion activities are major factors having impact on interest rate movement.

In case of India, government borrowing is major factor among others. To funding higher fiscal deficit, RBI issue bonds in market to raise the money.

However bond price and bond yield have inverse relationship. Due to the huge supply bond prices are declining and yield is going up.

In this scenario, analysis of interest rate becomes essential to understand the market dynamics. Banks, primary dealers, FIIs will have great advantage by way of interest rate future trading.

A futures contract is an agreement between a buyer (seller) and an exchange or its clearinghouse in which the buyer (seller) agrees to take (make) delivery of a standard quantity of a specific asset/financial instrument at a specified price at the end of a designated period of time.

Future trading is essential as it is the best way of hedging against risk, perfect way for financial leverage and also effective management of funds. It would be the perfect way for proper price discovery.

Market regulators are planning to launch interest rate future in India very soon however proper schedule is yet to announce.

Apex bank of the country dose not have control on long term interest rate as it is determine by market force.

However instruments like interest rate future will bring more transparency in the movement of interest rate.

Role of RBI in interest rate future According to RBI's regulation, Banks/PDs/FIs, allowed to undertake FRAs/IRS for their balance sheet management or for market making, Overall swaps undertaken for market making PVBP should be within 0.25% of the net worth, Banks have been allowed to take trading positions in interest rate futures.

Banks need to disclose as a part of the notes on accounts to balance sheets the following details:

1) Notional principal amounts of exchange traded interest rate derivatives undertaken during the year.

2) Notional principal amounts of exchange traded interest rate derivatives outstanding as on year-end.

Contract Specifications:

- Underlying – 10Y coupon bearing GOI security

- Notional coupon – 7.00% s.a. (day count 30/360)

- Contract Size – Rs. 2.00 lacs

- Available Contracts – quarterly contracts expiring in the months of March, June, September and December.

- Deliverable Month – from 1st of the contract month to last day of contract month, i.e. 1 month

- Tenor – The maximum maturity of the contract is 12 months

- Last Trading day – Seventh business day preceding the last business day of the delivery month

- Last Delivery Day – Last business day of the month

- Trading Hours – 9:00 a.m. to 5:00 p.m.

Margin requirement:

Cash/Collateral deposited on fresh positions. Represents a deposit against short-term price movement.

The amount of initial margin is set by the Exchanges, in accordance with the guidelines laid down by the RBI-SEBI Technical Committee Report.

Based on a 99% VaR calculations, as per the methodology suggested by the RBI-SEBI Report. Subject to a minimum of 2.33% of the value of the futures contract on the first day of trading and L1.6% of the value of the futures contract thereafter

The Daily Settlement Price would be calculated based on the closing price of the futures contract on the trading day, which would be declared by the exchange soon after closing hours.

The closing price is calculated as the Weighted Average price of the futures contract in the last half an hour of trade.

Recently RBI has launched currency futures, which is working successfully. Interest rate is always the subject of interest of every individual.

It does have vital importance in the life of individual who is paying EMI for home loan and the banks, which approve that loan amount. Both the parties are worried for the risk, which is underlying in the trade.

To cover the risk, there is a need of perfect judgment of interest rate trend. In short, interest rate future trading will be the perfect platform for both the parties concerned in the trade.

It would be the best place where one can precisely judge the movement of upcoming interest rate. As of now, Interest rate futures only banks have been permitted for in India, but there are lots of indications that the coverage of participants will be enhanced in due course.

Bond Price Get Higher A Little Bit - July 22, 2009

The bond prices witness a marginal growth on July 21 amidst thin trading volumes. The prices surged in the first half of trade after US treasury yields fell but the prices fell on account of profit booking by investors, the dealer said. The trading volumes were thin as the investors are waiting for RBI''s credit policy.

The total traded volumes on the order matching system were lower at Rs 4,190 crore (Rs 7,995 crore).

RBI will purchase government securities of Rs 6,000 crore through an open market operation on Thursday, which was announced by the central bank after the market hours yesterday.

The 6.90 per cent-10 year-2019 paper opened at Rs 100.10 (6.88 per cent YTM) and closed at Rs 99.90 (6.91 per cent YTM) as against the previous close of Rs 99.87 (6.92 per cent YTM).

The 7.94 per cent-12 year-2021 paper opened at Rs 105.32 (7.26 per cent YTM) and closed at Rs 105.26 (7.26 per cent YTM) as against the previous close of Rs 105.20 (7.27 per cent YTM).

Rupee Cataract During Tandem With Equity Markets - July 22, 2009

In line with the local stock market, the Indian rupee fell by 22 paise against the dollar on July 21, on the back of importers'' demand for the US currency. Most of the Asian currencies were also weaker against the dollar, that impacting rupee sentiment.

On the Interbank Foreign Exchange market, the rupee opened slightly lower at 48.25/26 against previous day close of 48.20/21 and fell further in sync with equity markets to close the day at 48.42/44. The rupee moved in a range of 48.24 and 48.46 per dollar.

The Indian benchmark Sensex ended lower by 128.52 points or 0.85 per cent. Asian indices ended mixed while European markets resumed better yesterday.

However, the Reserve Bank of India (RBI) fixed the reference rate for the US dollar at Rs 48.27 and for the euro at Rs 68.54.

Foreign Direct Investment In May Dips By 47 Per Cent - July 21, 2009

The foreign direct investment (FDI) in India fell by about 47 per cent to $2.1 billion in May on account of the global recession and the trend is likely to continue for some more months, a senior government official said yesterday. The FDI during the same month last year was $3.9 billion. The FDI in the first two months of this financial year is $4.43 billion, the official said. The government had scaled down the FDI target by $5 billion from $35 billion last fiscal.

The cumulative FDI from April 2000 to March 2009 stands near to about $90 billion. The FDI in 2008-09 was $27.3 billion as against $24.5 billion in 2007-08.

Rupee Spurts By 52 Paise To 2 Week High Of 48.20 - July 21, 2009

The rupee appreciated sharply by 52 paise to close at a two-week high of 48.20/21 against the dollar on Tuesday due to the weakness of the US currency overseas and strong equity markets that powered the local unit to bounce-back. The US dollar fell to a six-week low in early trade on the London Exchange after equity markets surged on account of hopes of encouraging earnings.

In fairly active trade at the Interbank Foreign Exchange (forex) market, the rupee moved in a range of 48.18 and 48.56 after resuming stronger at 48.52/54 a dollar from its previous close of 48.72/73.

The rupee rallied to touch a two-week high of 48.18 in afternoon trade by cutting short a two-day losing streak, as the dollar slipped sharply against the euro.

The dealers said that buoyant equity markets also supported the rupee, raising the expectations of increased capital inflows in the second half of the calendar year. Moreover, the fresh signs of recovery in the economy also aided rupee sentiment.

Gold Importation Cut In Two To 12 Tonnes In June - July 21, 2009

The imports of Gold imports dipped by 50 per cent in June as compared to the same period last year on account of the slowing demand amid a rise in prices. The imports of gold in June 2009 stand at 12 tonnes as against 24 tonnes in the same month last year, according to the data provided by the Bombay Bullion Association.

The demand for gold declined as the prices hovered high between between Rs 14,500 to Rs 15,000 per 10 grams level in the domestic markets, Bombay Bullion Association President Suresh Hundia said. The imports of gold in May stand at 17.8 tonnes.

The imports of Gold have been sluggish so far this year and was at 51.6 tonnes during the period between January-June 2009 as compared to 139 tonnes in the same period last year, the data stated. In January, only 1.8 tonnes of gold was imported however no imports was reported during February and March on account of lack of demand following high gold prices, which were ruling over Rs 15,000 per 10 grams level then.

Foreign Institutional Investors Inflow Crosses $6 Billion - July 20, 2009

Foreign Institutional Investors have shown their confidence in the Indian markets by injecting more than $6 billion, or about Rs 29,940 crore this year, with over $1 billion coming in July alone. The overseas investors are the net purchasers of Indian stocks worth $6.18 billion (Rs 29,940.30 crore) from January to July this year.

According to the data with the Securities and Exchange Board of India, FIIs were the gross buyer of shares worth Rs 2,98,675.70 crore while the sale of equities by them valued at Rs 2,68,735.30 crore, that resulting in a net inflow of Rs 29,940.30 crore ($6.18 billion).

The FIIs in July made a net investment of Rs 5,637 ($1.16 million) in the domestic equity markets. However, during the same period, the BSE Sensex has lost nearly 2%.

Till now, FIIs are the net seller of debts worth Rs 973.60 crore ($151 million), even as the infusion by the overseas investors stood at Rs 4,485.10 crore ($932 million) so far in July, the Sebi data said.

Right Instant To Go Into Long-Term Oil Contracts Of CII - July 20, 2009

The Confederation of Indian Industry (CII) has said that entering into long-term crude oil contracts and the strategically acquiring oil acreages overseas is necessary for India''s future energy security. The accelerated demand for energy makes it imperative for India to garner assured and continuous supply of energy at reasonable prices through internal efforts and acquiring international acreages.

As per CII estimates, in a business-as-usual 8% GDP growth rate scenario, the demand of Oil would be 328 Mtoe by 2030, a growth of 3.8% year-on-year.

Moreover, the chamber also emphasised that the industry, both in public and private sectors, should collaborate to secure oil equity overseas.

Even though the crude oil price has increased almost 100 per cent since February to reach $70 a barrel, it is still below $100. This is perhaps the right time to secure long-term oil supply deals at an affordable price, said the chamber.

"Ensuring India''s energy security requires active participation from the Indian industry, both public and private sectors, with support from the Government, to secure fuel supply at predictable and affordable prices," said Mr Chandrajit Banerjee, Director-General, CII.

Gold Exchange Traded Funds Investors In India Grow By 100 Per Cent - July 20, 2009

With the rising of gold prices to new high almost every month, the investors in India have started to show a totally new-found interest in the gold funds. The gold exchange traded funds (ETFs) are new in India, but they have given an impressive returns of more than 20 per cent in the last one year. The gold fund managers in India say the ETFs collections are rising and investors are increasing by a 100 per cent year-on-year.

"Gold ETFs are continuing to pick up in India. Gold collection ETFs rose 24.6 per cent to 5.931 tonnes from 4.761 tonnes a year ago," Arvind Chari, fund manager, Quantum Mutual Fund that runs a gold ETF in India said. He also said that the gold ETFs are emerging as the fasting growing investment segment in India.

Gold ETFs in India, which was launched in 2007, are managed by six fund houses including Benchmark Asset Management as well as UTI Mutual Fund, Kotak Mahindra Mutual Fund, Reliance Capital Asset Management, Quantum Mutual Fund and the State Bank of India.

Despite of the fact that the Gold collections under the ETFs are growing in India year on year, they remain negligible when compared to India''s imports of around 700 tonnes annually.

The main problem for rapid growth of gold ETFs in India is said to the lack of awareness and complicated investment norms.

The five gold ETF funds put together hold just above five tonnes of gold. According to the World Gold Council, the Indian households own gold of about 15,000 tonnes that includes around 10 per cent of global stocks.

Reserve Bank Of India To Ensure Stable Interest Rates - July 18, 2009

The Reserve Bank of India (RBI) today said that it would ensure a benign and stable interest rate regime to safeguard the common man''s interest as well as ensure adequate liquidity in the system. "The RBI''s effort is to ensure a benign and stable interest rate regime ... It is for ensuring adequate liquidity in the system.

We are trying to keep interest rates benign," Reserve Bank Deputy Governor K C Chakrabarty told reporters.

The banks, particularly in the private sector have to lower the lending rates in the period ahead in the face of high competition in industry, Chakrabarty said on the sidelines of the Skoch BFSI summit being held in Mumbai.

Moreover, he said that the individual conditions of banks and the inflationary situation will determine whether there will be any cut in lending rates by the banks.

He also added that if the cost of funds remains high in the system, banks tend to hike their lending rates.

Regarding the credit growth, he said that credit outflow is likely to boost in the coming quarters due to the signs of recovery in the economy. The apex bank will ensure adequate liquidity in the banking system, he said.

Gold Consolidates As $940 Looks Difficult To Breach - July 18, 2009

Gold dipped in red after early gains as $940 looked difficult to breach and also as the US dollar surged against the currency rivals today. Overall the global equities were higher today with European shares up, putting markets on track for a fifth straight session of gains as major U.S. companies continued to beat earnings expectations. Asia stocks also rose, but gains were tentative ahead of the weekend.

U.S. stock futures fell after General Electric's second-quarter results, pointing to a lower opening on Wall Street.

Oil slid below $62 a barrel and base metals also declined, as traders turned away from industrial commodities amid lingering concerns over the outlook for the global economy.

Gold is seen consolidated in a narrow range these days, in the last 2 days it has traded in the range of $941 – 933.3 which is the range of $7.7.

There is no such striking factor in the markets right now, which will boost the gold very easily. It has been facing stiff resistance at the $941 levels and may continue to face it in the near term. The deflationary scenario has overshadowed all the positive factors for gold.

MCX August bullion faced stiff resistance near Rs 14790 levels as was recommended in the morning update.

It was last seen quoting at Rs 14731 up nearly Rs 20 per 10 grams. A break of days high may take it to 14825 and 14865 levels. Otherwise the supports are at 14690 and 14655 levels.

Holdings of the largest gold exchange-traded fund, the SPDR Gold Trust, inched up 0.31 tonnes on Thursday.

However, London's ETF Securities said it saw an outflow of nearly 40,000 ounces that day from its ETFS Physical Gold product.

Non-Farm Payrolls Fail To Lift Gold: June's US non-farm pay rolls bumped up, raising questions about when the US economy will bottom and brought to an end a string of improvements dating back to February.

Payrolls have been improving since the month of February 2009; June was the first month when it surged above the previous month's payrolls.

Non farm pay rolls changed the sentiments for the entire financial world, with the equities taking a downward path, Yen gaining strength, crude oil sinking to nearly 2 month lows, gold also tumbled to near $900 levels its lowest level since May 5 2009.

Precious Metals Closing Stages Diverse - July 17, 2009

Precious metal prices ended mixed on Thursday, 16 July, 2009. Gold prices ended their three day winning streak and ended moderately lower. However, silver managed to gain for the day. Generally, a stronger dollar pressures demand for dollar-denominated commodities, such as crude oil and gold, which become more expensive for holders of other currencies and also vice versa.

On Thursday, gold for August delivery ended at $935.4, lower by $4 (0.4%) an ounce on the New York Mercantile Exchange.

Before today, gold had risen by 3% in the past three sessions. Last week, gold ended lower by 1.6%. Year to date, gold prices are higher by 5.9%.

For the month of June, 2009, gold ended down by 5.4%. Gold had ended the month of May higher by 9.8%.

It was the highest monthly gain registered by gold in six months. For the second quarter, gold ended higher by 0.5%. The metal had gained 4.3% in the first quarter of this year.

On 17 March, 2008 prices had skyrocketed to a high of $1,034/ounce. But prices have dropped somewhat (11%) since then.

On Thursday, Comex silver futures for September delivery rose 4.1 cents (0.2%) at $13.235 an ounce.

Silver ended 13% down for the month of June, 2009. For the month of May, silver gained 26.6%. It was the biggest monthly gain for silver in more than two decades. For second quarter, silver rose 4.5%. Year to date, silver has climbed 17.3% this year. For 2008, silver had lost 24%.

The Philadelphia Fed's manufacturing index in US slipped to negative 7.5 in July from negative 2.2 in June.

Though market was expecting a slide, the drop was more than expected. Readings below zero in the Philly Fed diffusion index indicate contraction in activity.

The index measures the breadth of economic activity across firms. In 2008, gold prices ended higher by 5.5%. The dollar index had gained 12% that year.

At the MCX, gold prices for August delivery closed lower by Rs 53 (0.35%) at Rs 14,717 per 10 grams. Prices rose to a high of Rs 14,816 per 10 grams and fell to a low of Rs 14,694 per 10 grams during the day's trading.

At the MCX, silver prices for September delivery closed Rs 37 (0.17%) lower at Rs 21,821/Kg. Prices opened at Rs 21,830/kg and fell to a low of Rs 21,727/Kg during the day's trading.

Bond Prices Positive On Reserve Bank Of India Auction Plan - July 17, 2009

The bond prices shot up by about 50 paise on July 16 on the back of the government''s announcement of the details regarding its borrowing programme between July and September. Although the RBI released the auction calendar after market hours, the bond prices grew during the day as the market participants were anticipating a lower weekly borrowing programme, said bond dealers.

Given the current liquidity, Rs, 50,000 crore of additional borrowing will not be very difficult for the market to absorb.

There were expectations that Rs 15,000 crore of government securities would be issued by RBI every week. But, according to the RBI''s auction calendar, it will issue Government securities worth Rs 12,000 crore every week till September.

In the last two weeks of September, the Central bank will issue securities worth Rs 7,000 crore and Rs 8,000 crore.

Rupee Be Grateful For In Opposition To Dollar - July 17, 2009

Extending the previous day''s gains, the Indian rupee appreciated by 12 paise at 48.51 against the US dollar in early trade on Thursday on the back of hopes of increased capital inflows by foreign funds as markets may open notably higher in line with firming Asian bourses. At the Interbank Foreign Exchange (Forex) market, the rupee was quoted higher at 48.51 a dollar, a gain of 12 paise over the previous close of 48.63.

The rupee gained 33 paise in the previous day. The forex dealers said that the rupee continued to draw support from a sharp rally in local stocks and weakness in the dollar against the other currencies in global markets.

Precious Metals Get Higher For Third Instantly Day - July 16, 2009

Precious metal prices rose for the third straight day on Wednesday, 15 July, 2009. Prices rose with higher crude price and weak dollar. Generally, a stronger dollar pressures demand for dollar-denominated commodities, such as crude oil and gold, which become more expensive for holders of other currencies and also vice versa.

On Wednesday, gold for August delivery ended at $939.4, higher by $16.6 (1.8%) an ounce on the New York Mercantile Exchange. Last week, gold ended lower by 1.6%. Year to date, gold prices are higher by 6.3%.

For the month of June, 2009, gold ended down by 5.4%. Gold had ended the month of May higher by 9.8%.

It was the highest monthly gain registered by gold in six months. For the second quarter, gold ended higher by 0.5%. The metal had gained 4.3% in the first quarter of this year.

On 17 March, 2008 prices had skyrocketed to a high of $1,034/ounce. But prices have dropped somewhat (11%) since then.

On Wednesday, Comex silver futures for September delivery rose 35.5 cents (2.7%) at $13.208 an ounce.

Silver ended 13% down for the month of June, 2009. For the month of May, silver gained 26.6%. It was the biggest monthly gain for silver in more than two decades. For second quarter, silver rose 4.5%. Year to date, silver has climbed 17.1% this year. For 2008, silver had lost 24%.

In the currency market on Wednesday, the U.S. dollar lost ground against most of its major rivals after data showed U.S. consumer prices rose in June at their fastest pace in nearly a year.

The dollar index, which weighs the dollar against a basket of six other currencies, fell by almost 0.7% during the day.

The Labor Department reported on Wednesday, 15 July, 2009 that U.S. consumer prices rose a seasonally adjusted 0.7% in June, 2009 matching expectations as gasoline prices jumped higher.

In 2008, gold prices ended higher by 5.5%. The dollar index had gained 12% that year.

At the MCX, gold prices for August delivery closed higher by Rs 114 (0.77%) at Rs 14,770 per 10 grams. Prices rose to a high of Rs 14,789 per 10 grams and fell to a low of Rs 14,631 per 10 grams during the day's trading.

At the MCX, silver prices for September delivery closed Rs 325 (1.5%) higher at Rs 21,858/Kg. Prices opened at Rs 21,565/kg and rose to a high of Rs 21,990/Kg during the day's trading.

Govt To Borrow $22.6 Billion More Up To Sept: RBI - July 16, 2009

The government will borrow additional Rs1.1 trillion ($22.6 billion) before the end of the first half of the fiscal that began on 1 April, a Reserve Bank of India (RBI) deputy said on Thursday, sending bond yields lower as the figure was les than the market expectation. Shyamala Gopinath told reporters that the borrowing would be done in 10 tranches and for this, a calendar would be published later today.

The government so far has borrowed Rs 1.8 trillion in the fiscal year 2009-10. Gopinath said the central bank would continue to buy back government bonds from the market, depending on liquidity conditions. It has so far bought back Rs29,850 crore in the fiscal year and the target was Rs80,000 crore.

Price Increases By The Side Of 1.21 Per Cent On July - July 16, 2009

India''s inflation stood at (-) 1.21 per cent for the week ended July 4 against (-) 1.55 per cent in the previous week mainly due to higher prices of fuel items. The wholesale price index during the corresponding week a year ago was as high as 12.19 per cent. The wholesale price index for all commodities for the week ended July, 4, 2009 rose by 0.7% to 236.4 from 234.7 for the previous week.

The index for ''Food Articles'' group dipped by 0.2% to 253.6 from 254.0 for the previous week. The index for ''Non-Food Articles'' group rose by 0.3% to 237.7 from 237.0 for the previous week.

Following the government decision to raise prices of petrol and diesel by Rs 4 and Rs 2 per litre, respectively effective July 1, prices of naphtha rose 15 per cent, furnace oil 11 per cent, petrol 10 per cent, high-speed diesel 7 per cent and light diesel oil by 4 per cent.

Precious Metals Observer Of Unimportant Expand - July 15, 2009

Precious metal prices registered little gains on Tuesday, 14 July, 2009. Prices rose as better than expected retail sales data in Wall Street sent some optimistic picture about the current economy. The weak dollar was also responsible for precious metal prices ending higher today. Generally, a stronger dollar pressures demand for dollar-denominated commodities, such as crude oil and gold, which become more expensive for holders of other currencies and also vice versa.

On Tuesday, gold for August delivery ended at $922.8, higher by $0.30 (0.03%) an ounce on the New York Mercantile Exchange. Last week, gold ended lower by 1.6%. Year to date, gold prices are higher by 4.5%.

For the month of June, 2009, gold ended down by 5.4%. Gold had ended the month of May higher by 9.8%.

It was the highest monthly gain registered by gold in six months. For the second quarter, gold ended higher by 0.5%. The metal had gained 4.3% in the first quarter of this year.

On 17 March, 2008 prices had skyrocketed to a high of $1,034/ounce. But prices have dropped somewhat (11%) since then.

On Tuesday, Comex silver futures for September delivery rose 7 cents (0.5%) at $12.855 an ounce.

Silver ended 13% down for the month of June, 2009. For the month of May, silver gained 26.6%. It was the biggest monthly gain for silver in more than two decades.

For second quarter, silver rose 4.5%. Year to date, silver has climbed 14.4% this year. For 2008, silver had lost 24%.

In the currency market on Tuesday, the dollar index, which weighs the dollar against a basket of six other currencies fell by almost 0.3% earlier during the day. But then, it recovered to end almost flat.

The Commerce Department reported on Tuesday, 14 July, 2009 that retail sales in US rose a better-than-expected 0.6% in June, the strongest sales report since January's 1.7% increase.

In a separate report, the Labor Department reported on Tuesday, 14 July, 2009 that U.S. producer prices rose 1.8% in June, 2009.

It climbed the most since November 2007. In 2008, gold prices ended higher by 5.5%. The dollar index had gained 12% that year.

At the MCX, gold prices for August delivery closed higher by Rs 60 (0.41%) at Rs 14,656 per 10 grams.

Prices rose to a high of Rs 14,690 per 10 grams and fell to a low of Rs 14,566 per 10 grams during the day's trading.

At the MCX, silver prices for September delivery closed Rs 135 (0.63%) higher at Rs 21,533/Kg. Prices opened at Rs 21,440/kg and rose to a high of Rs 21,653/Kg during the day's trading.

India Introduction Gold Significance 76 Lakh During Apr-Jan - July 15, 2009

The total import of gold by India was worth Rs 76 lakh during first ten months of 2008-09 fiscal, the government informed the Parliament on July 13. The total value of imports in 2007-08 stood at Rs 67 lakh, it said. In a written reply to the Lok Sabha, Minister of State for Commerce Jyotiraditya Scindia said that the rough estimates place gold demand in the country at 700-800 tonnes per annum.

Moreover he said, "The movement in prices of gold in India in the recent period is broadly in tandem with similar movement in international markets."

The various factors that affect the gold price are the demand and supply, investor interest, interest rates, movement in the exchange rate of US dollar vis-a-vis other international currencies, he said.

Besides this, the minister said that the total rubber imports of the country stood at 44,083 tonnes during first three months of the current fiscal while the exports have remained at 834 tonnes.

Gold Rises For Third Day On Compact Global Cues - July 15, 2009

The gold prices strengthened for the third day, on July 14, rose Rs 25 to close at Rs 14,830 per 10 gram in the bullion market due to buying by stockists and jewellers amid firming global cues. In line with this, the silver prices surged by Rs 200 to close at Rs 21,700 per kg due to the strong industrial demand.

According to marketmen the gold prices shot up after buying by stockists and jewellers ahead of festival season and firming overseas trends.

The gold rose for a fourth day in London as higher oil prices and a weaker dollar increased demand for bullion as an alternative investment and hedge against rising consumer prices.

On the domestic arena, the standard gold and ornaments shot up by Rs 25 each to Rs 14,830 per 10 grams and Rs 14,680 per 10 gram respectively.

In line with this, the sovereign also grew Rs 25 to Rs 12,350 per piece of eight gram. On the other hand, the silver ready surged by Rs 200 to Rs 21,700 per kg, while weekly-based delivery grew by Rs 160 to Rs 21,460 per kg.

The silver coins grew by Rs 100 to Rs 28,900 for buying and Rs 29,000 for selling of 100 pieces.

Precious Metals Get Together Various Stand Out - July 14, 2009

Precious metal prices rose on Monday, 13 July, 2009. Prices rose as the dollar pared earlier gains. Prices rose in spite of crude prices slipping further lower. Generally, a stronger dollar pressures demand for dollar-denominated commodities, such as crude oil and gold, which become more expensive for holders of other currencies and also vice versa.

On Monday, gold for August delivery ended at $922.5, higher by $10 (1.1%) an ounce on the New York Mercantile Exchange. Last week, gold ended lower by 1.6%. Year to date, gold prices are higher by 4.5%.

For the month of June, 2009, gold ended down by 5.4%. Gold had ended the month of May higher by 9.8%.

It was the highest monthly gain registered by gold in six months. For the second quarter, gold ended higher by 0.5%. The metal had gained 4.3% in the first quarter of this year.

On 17 March, 2008 prices had skyrocketed to a high of $1,034/ounce. But prices have dropped somewhat (11%) since then.

On Monday, Comex silver futures for September delivery rose 14 cents (1.1%) at $12.785 an ounce.

Silver ended 13% down for the month of June, 2009. For the month of May, silver gained 26.6%. It was the biggest monthly gain for silver in more than two decades.

For second quarter, silver rose 4.5%. Year to date, silver has climbed 13.9% this year. For 2008, silver had lost 24%.

In the currency market on Monday, the dollar fell against the euro, with the European currency trading up 0.3%.

In 2008, gold prices ended higher by 5.5%. The dollar index had gained 12% that year.

At the MCX, gold prices for August delivery closed higher by Rs 96 (0.66%) at Rs 14,596 per 10 grams.

Prices rose to a high of Rs 14,625 per 10 grams and fell to a low of Rs 14,505 per 10 grams during the day's trading.

At the MCX, silver prices for September delivery closed Rs 135 (0.63%) higher at Rs 21,398/Kg. Prices opened at Rs 21,299/kg and rose to a high of Rs 21,446/Kg during the day's trading.

Rupee Cataract To Two-Month Near To The Ground - July 14, 2009

The rupee fell to a two-month low on the back of uncertainty about the economic recovery in the global markets. The rupee opened at 49.10/12 and touched a low of 49.44/46, during day trade. It closed at 49.08/10 as against the Friday''s close of 49.02. Along with this, the dollar also gained against other Asian currencies. In the forward premia market, the six-month closed at 2.32 per cent (2.41 per cent) while the one-year at 2.25 per cent (2.26 per cent).

Bond Prices Go Away Positive - July 14, 2009

The bond prices shot up on July 13 after the announcement by the Reserve Bank of India (RBI) regarding the quantum of borrowing for the week, which was lower than the market expectation. RBI announced an auction of Rs 12,000 crore of government securities while the markets were expecting the amount to be Rs 15,000 crore. Moreover, the sharp fall in US treasury yields give a boost to the prices, added the dealer.

Substantial buying was witnessed in almost all the papers. The total traded volumes on the order matching system were substantially higher at Rs 13,625 crore (Rs 5,735 crore).

Precious Metals Jump Down For A Second Time - July 13, 2009

Precious metal prices fell on Friday, 10 July, 2009. Prices fell in synchronization with crude price and strong dollar. Generally, a stronger dollar pressures demand for dollar-denominated commodities, such as crude oil and gold, which become more expensive for holders of other currencies and also vice versa.

On Friday, gold for August delivery ended at $912.5, lower by $3.7 (0.4%) an ounce on the New York Mercantile Exchange. For the week, gold ended lower by 1.6%. Year to date, gold prices are higher by 3.4%.

For the month of June, 2009, gold ended down by 5.4%. Gold had ended the month of May higher by 9.8%.

It was the highest monthly gain registered by gold in six months. For the second quarter, gold ended higher by 0.5%. The metal had gained 4.3% in the first quarter of this year.

On 17 March, 2008 prices had skyrocketed to a high of $1,034/ounce. But prices have dropped somewhat (12%) since then.

On Friday, Comex silver futures for September delivery lost 29 cents (2.2%) at $12.645 an ounce.

Silver ended 13% down for the month of June, 2009. For the month of May, silver gained 26.6%. It was the biggest monthly gain for silver in more than two decades. For second quarter, silver rose 4.5%. Year to date, silver has climbed 12.8% this year. For 2008, silver had lost 24%.

Crude oil has lost about 10% this week as a new report from the International Energy Agency reaffirmed concerns about weak demand. The dollar was higher against most of its major rivals.

In 2008, gold prices ended higher by 5.5%. The dollar index had gained 12% that year. At the MCX, gold prices for August delivery closed higher by Rs 5 (0.03%) at Rs 14,500 per 10 grams.

Prices rose to a high of Rs 14,504 per 10 grams and fell to a low of Rs 14,487 per 10 grams during the day's trading.

At the MCX, silver prices for September delivery closed Rs 7 (0.03%) higher at Rs 21,263/Kg. Prices opened at Rs 21,247/kg and rose to a high of Rs 21,279/Kg during the day's trading.

Govt Borrowings Won Alteration Interest Rates - July 13, 2009

Finance Minister Pranab Mukherjee assured that interest rates would not increase in the coming few months due to borrowing programme of the government. Finance Minister has projected government borrowings of Rs 4.51 lakh crore for the present fiscal. Mukherjee said, “Last fiscal also the Reserve Bank of India (RBI) was careful in debt management, and this year also we will ensure that the private sector can avail loans at affordable rates, and do not pay higher interest rate,”.

However, bankers have been expecting hike in interest rates in the next six months, due to the government borrowing and the difference between the consumer and wholesale price indexes.

Gold Recovers On Top Of Compact Significant Cues - July 13, 2009

The gold prices made a sharp rebound on Saturday after declining for two days and gained Rs 20 to Rs 14,710 per ten gram in Delhi due to the emergence of buying at existing lower levels influenced by firming global trend. However, on the other hand, the silver remained under selling pressure and fell by Rs 200 to Rs 21,400 per kg. The standard gold and ornaments that remained in negative zone since last two trading sessions, gained Rs 20 each to Rs 14,710 and Rs 14,560 per ten gram respectively.

However, the sovereign remained flat at Rs 12,300 per piece of eight gram. Meanwhile, the silver remained under selling pressure, with silver ready falling by Rs 200 to Rs 21,400 per kg while the weekly delivery by Rs 180 to Rs 21,260 per kg.

Govt No Plan To In Secret Place Gilts With Reserve Bank Of India - July 10, 2009

Despite the fiscal deficit projected to touch 6.8 per cent of the gross domestic product (GDP) in the year ending March, the government said that it is not planning to privately place gilts with the Reserve Bank of India (RBI) as of now. "At present, notwithstanding the 6.8 per cent fiscal deficit projected in Budget estimate 2009-10, the government does not propose to invoke the above provisions of the Fiscal Responsibility and Budget Management (FRBM) Act for facilitating RBI participation in the primary market for government securities," the finance ministry said in a statement.

The government said that the amount under OMO and the decision to buy or sell gilts in the secondary market are determined by the prevailing liquidity conditions.

The Finance Secretary Ashok Chawla, earlier this week, had said that 50 per cent of the government''s borrowing this year will have to be supported by OMO.

The Budget has pegged the government''s gross market borrowing for the current financial year at a record high of Rs 4.51 lakh crore as against the interim Budget estimate of Rs 3.62 lakh crore.

No Revolutionize During Eliminate Income Tax - July 10, 2009

With the meager monsoons in the large parts of Northern India, the government has put on hold, the review of excise as well as service tax rates. Many were watching closely about this decision. In this year''s budget, there is no rollback on excise and service tax rate cuts and that could be the way Pranab Mukherjee keeps it all year.

As per the sources, the worries of a poor monsoon are likely to spook all plans to hike excise and service tax rates later in the year. There were indications that both taxes may be reviewed in September-October.

However, to bridge shortfall of the indirect tax revenue, the finance ministry was initially keen to increase the Central Excise rate to10 per cent from 8 per cent.

The view of the government is based on the premise that a poor monsoon is expected to hit hard on the goods demand, especially in rural India and under these circumstances, a correction in the mid fiscal in indirect tax rates could be counter productive.

The monsoon factor could depress the revenue collections and there could be shortfall of indirect tax due to depressed sales and unchanged of central excise and service tax. The indirect tax collections between April-May are already a negative, that is, 28 per cent.

Precious Metals Make Progress Since Two Month Lows - July 10, 2009

Precious metal prices rose from their two month lows on Thursday, 09 July, 2009. Prices rose in synchronization with as crude price which ended its six day losing streak. Prices also rose due to the weak dollar. Generally, a stronger dollar pressures demand for dollar-denominated commodities, such as crude oil and gold, which become more expensive for holders of other currencies and also vice versa.

On Thursday, gold for August delivery ended at $916.2, higher by $6.9 (0.8%) an ounce on the New York Mercantile Exchange. Last week, gold ended lower by 1.1%. Year to date, gold prices are higher by 3.8%.

For the month of June, 2009, gold ended down by 5.4%. Gold had ended the month of May higher by 9.8%.

It was the highest monthly gain registered by gold in six months. For the second quarter, gold ended higher by 0.5%. The metal had gained 4.3% in the first quarter of this year.

On 17 March, 2008 prices had skyrocketed to a high of $1,034/ounce. But prices have dropped somewhat (12%) since then.

On Thursday, Comex silver futures for September delivery gained 8.3 cents (0.6%) at $12.935 an ounce.

Silver ended 13% down for the month of June, 2009. For the month of May, silver gained 26.6%. It was the biggest monthly gain for silver in more than two decades.

For second quarter, silver rose 4.5%. Year to date, silver has climbed 15% this year. For 2008, silver had lost 24%.

In the currency market on Thursday, the dollar index, a six-currency measure of the greenback's value fell. The euro gained more than 1% against the dollar. Crude prices ended marginally higher today breaking their six day of continuous losing streak.

Crude oil prices settled around $61 today. Crude had given up almost $13 in the past six sessions. In 2008, gold prices ended higher by 5.5%. The dollar index had gained 12% that year.

At the MCX, gold prices for August delivery closed lower by Rs 15 (0.1%) at Rs 14,481 per 10 grams.

Prices rose to a high of Rs 14,525 per 10 grams and fell to a low of Rs 14,430 per 10 grams during the day's trading.

At the MCX, silver prices for September delivery closed Rs 72 (0.33%) lower at Rs 21,501/Kg. Prices opened at Rs 21,589/kg and fell to a low of Rs 21,341/Kg during the day's trading.

Precious Metal Prices Drop To A Large Extent Worse - July 09, 2009

Precious metal prices dropped substantially lower on Wednesday, 08 July, 2009. Slipping crude prices coupled with the dollar which remained strong erased more shine from precious metals by decreasing their appeal as a hedge against inflation. Generally, a stronger dollar pressures demand for dollar-denominated commodities, such as crude oil and gold, which become more expensive for holders of other currencies and also vice versa.

On Wednesday, gold for August delivery ended at $909.3, lower by $19.8 (2.1%) an ounce on the New York Mercantile Exchange. Last week, gold ended lower by 1.1%. Year to date, gold prices are higher by 3%.

For the month of June, 2009, gold ended down by 5.4%. Gold had ended the month of May higher by 9.8%.

It was the highest monthly gain registered by gold in six months. For the second quarter, gold ended higher by 0.5%. The metal had gained 4.3% in the first quarter of this year.

On 17 March, 2008 prices had skyrocketed to a high of $1,034/ounce. But prices have dropped somewhat (13%) since then.

On Wednesday, Comex silver futures for September delivery lost 36.8 cents (2.8%) at $12.852 an ounce.

Silver ended 13% down for the month of June, 2009. For the month of May, silver gained 26.6%. It was the biggest monthly gain for silver in more than two decades.

For second quarter, silver rose 4.5%. Year to date, silver has climbed 14.4% this year. For 2008, silver had lost 24%.

In the currency market on Wednesday, the dollar index, a six-currency measure of the greenback's value rose.

Dollar rose against the euro. The index rose as leaders from the Group of Eight nations kicked off their meeting today.

Crude prices traded lower once again today due to the strong dollar and economic worries. Crude oil prices settled around $60 today. With today's drop crude has given up almost $13 in the past six sessions.

In 2008, gold prices ended higher by 5.5%. The dollar index had gained 12% that year.

At the MCX, gold prices for August delivery closed lower by Rs 108 (0.73%) at Rs 14,496 per 10 grams.

Prices rose to a high of Rs 14,624 per 10 grams and fell to a low of Rs 14,457 per 10 grams during the day's trading.

At the MCX, silver prices for September delivery closed Rs 244 (1.11%) lower at Rs 21,573/Kg. Prices opened at Rs 21,761/kg and fell to a low of Rs 21,460/Kg during the day's trading.

Exports Decrease 29 Per Cent At Home June - July 09, 2009

The exports of India declined by 29% in June 2009, Union minister for commerce & industry Anand Sharma told the Rajya Sabha on Wednesday. The country''s exports are experiencing a declining trend for the last nine months. The growth in exports had registered a fall of 29.2% at $11 billion in May 2009 while the fall was 34% in April 2009. As per a sample study conducted by the commerce department, 648 exporting units in India reported a loss of Rs 8,982 crore between August 2008 and April 2009.

The exporting units in 17 sectors witnessed job loss of 134,593 people during the period, another survey conducted by the department on retrenchment said.

"This does not reflect the total job losses, which would be higher," minister of state of commerce & industry Jyotiraditya M Scindia informed the House.

Mr Sharma said the pace of export fall had begun to recede and expressed optimism that the measures announced by the Finance Minister in the budget would help the export sector.

The finance minister in the budget decided to continue with the interest rate subvention (discount) scheme and the export credit guarantee scheme for exports beyond September 2009 till March 2010.

The minister also said that it is against creating barriers against imports into the country as India itself has been opposing the protectionist policies that block the flow of global trade.

Rupee Locks Of Hair By The Side Of Seven Week Low - July 09, 2009

The rupee on Wednesday virtually touched the crucial 49 level before closing at a seven-week low of 48.88/89 against the US dollar, cheaper by 44 paise, backed by the weak local stocks amid heavy capital outflows. The rupee was last seen at this level in May. It had closed at 49.40/42 a dollar on May 15 and in the following trading day, it closed at 47.88/89 against the dollar.

In the domestic arena, the equity markets as the Indian benchmark Sensex declined by 401 points or 2.83 per cent on account of weakness in global stocks in the wake of rising doubts about recovery in the economy.

The rupee resumed weak at 48.76/77 a dollar against its previous close of 48.44/45 a dollar and later traded in a range of 48.73 and 48.94 during the day.

The dealers at the Interbank Foreign Exchange market said that the fall in equity market raised fears of capital outflows even as the foreign institutional investors (FIIs) pulled out sizeable funds on July 7. They said there was little dollar buying or selling during the day.

Precious Metals Closing Stages Diverse - July 08, 2009

Precious metal prices ended mixed at USA on Tuesday, 07 July, 2009. Gold ended higher while silver ended lower after a full day of volatile trading. The dollar remained strong trying to erase some shine from precious metals by decreasing their appeal as a hedge against inflation. But gold managed to end higher today. Generally, a stronger dollar pressures demand for dollar-denominated commodities, such as crude oil and gold, which become more expensive for holders of other currencies and also vice versa.

On Tuesday, gold for August delivery ended at $929.1, higher by $4.8 (0.5%) an ounce on the New York Mercantile Exchange. Last week, gold ended lower by 1.1%. Year to date, gold prices are higher by 5.1%.

For the month of June, 2009, gold ended down by 5.4%. Gold had ended the month of May higher by 9.8%.

It was the highest monthly gain registered by gold in six months. For the second quarter, gold ended higher by 0.5%. The metal had gained 4.3% in the first quarter of this year.

On 17 March, 2008 prices had skyrocketed to a high of $1,034/ounce. But prices have dropped somewhat (11%) since then.

On Tuesday, Comex silver futures for September delivery lost 1.8 cents (0.1%) at $13.22 an ounce.

Silver ended 13% down for the month of June, 2009. For the month of May, silver gained 26.6%. It was the biggest monthly gain for silver in more than two decades.

For second quarter, silver rose 4.5%. Year to date, silver has climbed 17.2% this year. For 2008, silver had lost 24%.

In the currency market on Tuesday, the dollar index, a six-currency measure of the greenback's value stayed steady. Dollar rose against the euro.

The index rose on speculation that leaders from the Group of Eight nations will make efforts later this week to shore up the greenback.

Crude prices traded lower once again today due to the strong dollar. Crude oil prices traded lower by 2% around $62/barrel. In 2008, gold prices ended higher by 5.5%. The dollar index had gained 12% that year.

At the MCX, gold prices for August delivery closed higher by Rs 85 (0.6%) at Rs 14,604 per 10 grams.

Prices rose to a high of Rs 14,620 per 10 grams and fell to a low of Rs 14,495 per 10 grams during the day's trading.

At the MCX, silver prices for September delivery closed Rs 3 (0.01%) lower at Rs 21,817/Kg. Prices opened at Rs 21,850/kg and fell to a low of Rs 21,700/Kg during the day's trading.

Increasing Fiscal Shortage A Cause For Concern - July 08, 2009

The global rating agency Moody''s on Tuesday expressed concern on India''s high fiscal deficit projection of 6.8 per cent for 2009-10. With out a clear road map for the disinvestment and structural reforms, the rating agency cautioned that the situation may become complicated.

"We remain cautious about how the government can hope to avoid complicating monetary management, without advancing structural reforms or re-prioritising expenditures or pushing for disinvestments more vigorously," Moody''s Vice President - Senior Analyst (Sovereign Risk Group) Aninda Mitra said from Singapore.

"We also recognise that this government has the political scope to formulate a robust response to emerging challenges and this is also incorporated into the stable outlook we maintain on the sovereign ratings," Moody''s said.

Moody''s said that the budget presented by the government is growth-oriented and contains a slightly larger than expected "headline deficit number" but the same is broadly consistent "with near-term stability in the government''s debt trajectory".

Gold Import Duty Hike May Urge Smuggling - July 08, 2009

The World Gold Council (WGC), on Tuesday said that the hike in import duty of gold, which was announced by the Finance Minister in the Union Budget, may lead to additional gold smuggling, especially when there is high demand especially during the festival season. In the Union Budget for 2009-10, Pranab Mukherjee, announced a hike of 100 per cent in the customs duty on serially-numbered gold bars as well as gold coins to Rs 200 per 10 grams.

Moreover, the customs duty on other forms of gold and silver also has been doubled to Rs 500 per 10 grams while Rs 1,000 per kilogram, respectively.

"We hope that this higher duty rate does not add to significant trading through non-official channels.

The difference in price between the internationally-sourced gold and Indian domestic gold widens to 3-3.5 per cent per 10 grams due to additional taxation and this could lead to additional smuggling, especially during periods of high demand during festival season," WGC said in a statement in Mumbai.

Moreover, WGC has warned that the hike in the import duty of gold would put added pressure on the gold market.

The Indian Government in its recent Union budget announced that it will invest more in the agricultural as well as industrial and social sectors in an effort to boost consumer confidence and drive economic growth, which resulting in a budget increase of 36 per cent. To help pay for this package, the gold industry has become a tax target, WGC said.

Gold Looks Up And About On Hike In Import Duty - July 07, 2009

The gold prices recovered on the bullion market on Monday due to fresh local demand. Along with this, the silver also firmed up further owing to persistent demand from industrial users. The customs duty on silver has also been increased to Rs. 1,000 a kg from Rs. 500. In the domestic market, the standard gold (99.5 purity) shot up by Rs. 80 (10 gram) to Rs. 14,535 from previous weekend''s level of Rs. 14,455.

In line with this, the pure gold (99.9 purity) also firmed up with a similar margin to Rs. 14,605 from Rs. 14,525.

The silver ready (.999 fineness) hardened by Rs. 120 to Rs. 22,120 from Rs. 22,000 a kg previously.

Rupee Tumbles By 65 Paise To A Two-Week Low - July 07, 2009

The forex market even did not from the post-Budget weak stock market sentiments on July 6, with the rupee falling 1.4%-its biggest one-day drop in three months-after the government projected a higher-than-expected fiscal deficit target. The finance minister told on July 6 that the fiscal deficit of the government for the current fiscal is likely to go up to 6.8% as against 6.2% in the last year.

The partially convertible rupee closed at 48.56/59 per dollar, which is its lowest close in over a week.

The rupee fell as far as 48.57 during trade, which is its lowest since June 25. The loss was the biggest since it shed 1.5% on March 2, a day before it hit an all-time low of 52.2.

Bond Prices Fall On Higher Borrowing Plan - July 07, 2009

The bond prices dipped on July 6 after the announcement by the Government of a substantially higher borrowing programme of Rs 4.5 lakh crore for the fiscal in the Budget, which was much above the market expectations. The huge borrowing programme is likely to put pressure on the interest rates. This increased borrowing may exert upward pressure in yields on a week-on-week basis, said Mr B. Prasanna, Managing Director and Chief Executive Officer, ICICI Securities Primary Dealership Ltd.

The total traded volumes on the order matching system were lower at Rs 12,395 crore (Rs 14,405 crore).

The 6.07 per cent-5 year-2014 paper opened at Rs 99.4 (6.21 per cent YTM) and closed at Rs 98.43 (6.44 per cent YTM) as against the previous close of Rs 99.3 (6.23 per cent YTM).

Moreover, the 7.94 per cent-12 year-2021 paper opened at Rs 107.45 (7 per cent YTM) and closed at Rs 105.41 (7.25 per cent YTM), down by more than Rs 2 from the previous close of Rs 107.29 (7.02 per cent YTM).

Budget Could Provide For Recapitalisation Of PSU Banks - July 06, 2009

The Finance Minister Pranab Mukherjee may announce recapitalisation of public sector banks in order to help them meet the credit demand of productive sectors, especially those hit hard by the global economic downturn, in the Union Budget scheduled today. Last month, he had given an indication to this effect. "As the main shareholder of the public sector banks, the government has already announced that it wants to recapitalise public sector banks to enable them to achieve the CRAR (Capital to risk-weighted Assets Ratio) of 12 per cent," the minister had said.

Moreover, he also had said that the government will ensure that the credit growth of public sector banks does not suffer for requirement of capital.

The banks that likely to benefit include Bank of Maharashtra and Dena Bank. The capital infusion will help these banks to raise the capital adequacy to more than 12 per cent.

The government has announced capital infusion to the extent of about Rs 2,150 crore. Out of this, UCO Bank will get Rs 750 crore while Central Bank of India and Vijaya Bank will receive Rs 700 crore each.

Besides, the Cabinet has also given a green signal to the proposal for capital restructuring of United Bank of India.

Last fiscal, the government infused Rs 1,650 crore in three banks- Central Bank of India as well as UCO Bank and Vijaya Bank. UCO Bank received Rs 450 crore while Central Bank of India Rs 700 crore and Vijaya Bank Rs 500 crore.

However, the government will seek additional fund of $3 billion (about Rs 14,440 crore) from the World Bank for the recapitalisation of public sector banks.

Budget May Possibly Announce Incentives For Exporters - July 06, 2009

In the backdrop of global economic slowdown, the exports front has been drastically hit and the exporters'' community can expect some incentives in the budget. The export promotion councils as well as the Federation of Indian Export Organisations (FIEO) had met Finance Minister Pranab Mukherjee and Commerce and Industry Minister Anand Sharma and proposed incentives, including credit at 7 per cent interest rate as well as income tax holiday for five years.

The country''s merchandise exports grew just 3.4 per cent to $168.7 billion in the second half of 2008-09 due to global downturn.

But on the other hand, the shipments have been dropping for eight consecutive months since October 2008, that costing 5 million jobs, as per FIEO estimates.

The exporters say they are working on thin margins and taxation of the profit leaves them with no money for modernisation and expansion of manufacturing facility.

Growing Fiscal Shortage Position To Be India Impasse - July 06, 2009

As anything in excess is not good, anything in deficit is also as bad for an economy that intends to achieve inclusive growth. India has been witnessing a burgeoning fiscal deficit scenario in the past few years and the rate has worsened further with the country's fiscal deficit soaring by 64% in April 2009 as against the previous year. The present union budget will have to take strenuous efforts to reduce the growing burden if it has to ensure stability on the public finances front and achieve an optimal level of fiscal consolidation.

Fiscal deficit is an economic phenomenon, where the Government's total expenditure surpasses the revenue generated.

Off late, this particular anomaly has been fretting economies throughout the world as the great global crisis made its presence felt virtually everywhere.

In other words, mounting fiscal deficit has resulted as governments are spending beyond their means to help their respective economies emerge from the financial mayhem.

The fiscal monster has begun raising its ugly head in India as well. The enormous fiscal stimulus packages released by the Indian government by reducing different taxes and duties and also by raising expenditures have radically swelled the country's debt levels.

The cut in Cenvat rate from 14% to 10% and then to 8%, service tax from 12% to 10% and reduction in customs duty on a host of items resulted in a 17% decline in gross tax revenues.

India's fiscal deficit has been escalating in the last couple of years thanks to the global financial contagion accompanied by the largesse policies adopted by the government in the last year with the implementation of the Sixth Pay commission as well as the farm loan waiver.

S&P, a leading global rating agency has pegged India's fiscal deficit to increase 6.5% of GDP, which will be the highest in almost two decades, that is, excluding the off-budget liabilities such as fertilizer subsidies and compensation to state-run oil companies.

Together, these liabilities are estimated to be another 4% of GDP, thus taking the total deficit into double digits, which is certainly a worrisome figure.

This indeed is a matter of concern for a country like India that has managed to achieve positive growth amidst the crisis that has hammered even the most developed nations of the world.

The global financial turmoil began in 2007 with the world's largest economy, United States of America as the epicenter and later spilling into all the other economies.

This had prompted a substantial injection of capital into financial markets, fearing a credit crunch, which had begun seeing demand oozing out from economies throughout the world.

Governments and central banks throughout the globe were undertaking gargantuan borrowings to aid the economies to emerge from the mayhem, considered to be the worst since the Second World War.

Slowing growth has shrunk revenues while the unprecedented size of discretionary fiscal stimulus has bloated expenditures in most major economies.

Thus, the massive borrowing programs to spur consumption have resulted in accumulation of public debt in large quantities in most of the countries.

This has led to a situation where a secular and synchronized rise in fiscal deficit has been noted around the world.

India has been going through the issue of fiscal deficit since a couple of years. The country had witnessed some respite on the fiscal front since the reforms in 1990's and the Asian financial crisis of 1997-98.

The Indian government had undertaken fiscal reforms in 1990s as a part of economic liberalization.

Fiscal consolidation began in the early 1990s with fiscal deficit declining from 6.6 per cent of GDP in 1990-91 to 4.1 per cent of GDP in 1996-97.

However, it faltered and started deteriorating in 1997- 98 due to the Asian financial crisis and reached a level of 6.2 per cent of GDP in 2001-02.

Besides, the Fiscal Responsibility and Budget Management (FRBM) Act, 2003 regime definitely put the country on a higher growth trajectory inspiring confidence in the medium to long term prospects of the economy.

The process of fiscal consolidation had resulted in improvement in fiscal deficit from 5.9 per cent of GDP in 2002-03 to 2.7 per cent of GDP in 2007-08.

However, the global crisis has cluttered all these good efforts and the fiscal discipline has lost over the concerns triggered by an across the board slowdown in the world economic activity.

The country had already shelled out two large stimuli in the form of the farm loan waiver and the sixth pay commission that accounted for almost 2% of the total GDP.

Last but not the least, poor monsoon conditions, would consequently lower the economy's GDP in the current financial year, making it very difficult to provide any room to improve the public finances.

The officials have downgraded the 2009 monsoon to 93% of normal which is a "below normal" figure - a cautious trimming of the "near normal" 96% forecast in April.

A delayed monsoon will hit crop production immensely, which in turn would churn poor agricultural growth numbers.

All the hopes of a recovery in the economy would be rendered meaningless if the monsoons fail to revive.

Based on the current developments on the global as well as domestic front, the upcoming budget is expected to give out a number larger than that indicated in the interim budget (5.5 per cent of GDP).

The mushrooming fiscal deficit ultimately will result in large burden on to the future generations to come with higher tax rates and higher interest rates.

The new union government has a significant role to play in reducing the country's deficit and achieving enduring stable growth simultaneously.

Ideally speaking, the budget should try and contain all the ingredients to reduce the rising fiscal burden.

A rise in government spending has resulted in a crowding out of private consumption and investment.

Thus, in order to pull out the excesses infused into the system by the next two to three years, the government could resort to disinvestment of public sector units (PSU's) in order to accrue funds for narrowing down the rapidly increasing fiscal deficit.

These large stimulus packages as well as tax cuts have made it quite implicit that India would have to witness a phase of high fiscal deficit that needs to be rightly tackled.

However, we cannot deny the political pressure that would surface for the new government refuting them to go ahead and reverse some of the cuts in indirect taxes that were introduced in the second half of last fiscal.

However, the newly elected government will have to keep their political diplomacy aside for a while and think wisely over how to reduce the burden of debt the country is undergoing.

Meanwhile, the reversal of expansionary policies are also not warranted at an hour when the main ideology for the Indian as well as other governments is to reduce burden on public and inculcate them to spend more in order for the trickle down economics strategies to work.

But again they should not fail to see the future, which would burden masses ahead with high taxation in order to earn the revenue lost in the current era.