COMEX Gold Just Under $940 Ahead Of New York Open - August 01, 2009

Gold was seen consolidating around $940 per ounce mark in today's session as the commodity market participants eyed the steady undertone in the global markets. However, some selling pressure was seen at higher levels as traders covered their open positions ahead of the weekends. Earlier in the week, South African Trade union Solidarity signed wage agreements in both the gold and coal sectors in the Chamber of Mines yesterday.

The union says the agreements are favorable and is particularly satisfied that the agreements could be reached without strike action.

Meanwhile, in Asia today, COMEX Gold rose in tune with the global asset markets today, reconfirming a pattern, which has been in the play for the last few days.

The commodity is showing signs of re visiting $950 mark yet again given that there are overwhelming concerns that strong demand from India and China would not pull prices down much even if the dollar appreciates further.

The sustained high rupee price for gold is not having a significant impact on trade demand for the metal in the run-up to the wedding and festival demand in India, according to the World Gold Council (WGC).

Oil rose above $67 a barrel today, boosted by stock markets in Asia. The US stock futures also opened higher today signaling a potential rebound by Wall Street from the previous day's decline amid an ongoing flood of major corporate earnings data. Asian stock markets were higher Friday, buoyed by Wall Street's gains.

COMEX Gold futures for December are trading just under $940 per ounce, coming off a high of $942.70 per ounce.

MCX Gold witnessed some selling above Rs 14700 mark, coming off a peak at Rs 14728 and currently trade at Rs 14646, down Rs 50 or 0.34% from the previous close with a massive 12% drop in the open interest.

The near month August contract trades at Rs 14646, down Rs 56 with a massive decline of 23% in the open interest.

Reduced Monsoon May Dent Economic Recovery - August 01, 2009

Moody''s expressed concern that a poor monsoon may dent India''s economic recovery. Thus a decline in agricultural output and a consequential fall in farm income may not just limit rural spending but widen the gap in wealth between rural and urban India, damaging its social fabric. India''s rural population accounts for a large share of total consumption hence, a generous slowdown in rural spending will limit overall consumption growth.

However, although the farm sector accounts for about 18% of the country''s gross domestic product, farm incomes is a key to the survival of about two-thirds of its population.

Moreover, a considerable fall in this year''s food grain output may activate a price rise, adding that the Reserve Bank''s upward revision of inflation risk to 5% for 2009-10 from 4% earlier is an indicator of the tough times to come.

Not only this, the farming cycle during the Rabi may be affected, raising apprehensions about a dip in output in the immediate following season as well, if the lack of improvement in rainfall stretches into August.

However, the research major feels urgent upgrading in farm technology; better irrigation facilities and major drive to overall agricultural infrastructure hold the key to sustainable food security in the country.

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.