MUMBAI -- Gold has learnt to leave rupee appreciation aside and soared to new heights last week.
Gold’s upward trend is attributed largely to the coming festival season. Traders said the market is hoping for a big boom in the coming season as people in India have more money with them this year.
Standard gold in Mumbai rose to Rs 8,905 (US$219.20) last week, while in New Delhi, it was at Rs 8,870 per 10 grams. Pure gold, too, gained last week to close in Mumbai at Rs 8,955 per 10 grams.
Gold had strong fundamental support from the steady buying by the local bullion players in the wake of high jewellery inventories and lower overseas demand.
Analysts believe that consumers bought jewellery, fearing the upsurge may continue.
Optimists believe that the buying trend will continue in the coming festive season in September (Janmasthami and Ganesh Chaturthi) as the rupee’s appreciation will not affect gold prices that much in the local market as against its global movement.
Rupee appreciated up to 40.76, but soon recovered to the level of 40.98, resulting in the strengthening of gold prices in Mumbai.
The firmness in domestic gold price is largely attributed to a similar trend in London on Friday that percolated by the recovery in New York on Thursday. Gold opened at $668.00/668.60 per ounce, up from $664.70/665.50 late in New York on Thursday.
Gold opened higher in Europe on Friday on the news that gold production has been disrupted at a major mine in Papua New Guinea.
Global trend, which the domestic market follows, depicted a rise of $2.90 to $668.20 an ounce.
The October gold contract was up 0.6% at Rs 8,892 per 10 grams from the previous week close. MCX gold contracts registered a turnover of Rs 6,504.60 crore. Open interest of all gold contracts was 10,368 kilograms and total volume 73,092 kilograms.
According to market analysts, the major driver of gold prices remains high consumption level in India because of high disposable income and a growing economy with a strong GDP.
Monday, September 3, 2007
Gold Falls as Physical Demand Slows; Silver Little Changed
Sept. 3 (Bloomberg) -- Gold fell in Asia as physical demand slowed following the precious metal's rise to a three-week high. Silver was little changed.
Gold rose the most in a week on Aug. 31 on speculation that a rally in equities would boost investment demand. The Morgan Stanley Capital International Asia-Pacific Index gave up early gains after Japan's government reported an unexpected drop in corporate investment and the steepest slide in wages in three years. It was little changed at 152.10 at 1:20 p.m. in Singapore.
``In Asia the market is primarily driven by physical buying and physical demand has slowed down at this price level,'' said Ellison Chu, manager of precious metals at Standard Bank Asia Ltd. in Hong Kong. ``Overall trading has been very quiet and is likely to stay this way for the rest of the day as the U.S. is closed for a holiday today.''
Gold for immediate delivery, which reached $674.66 an ounce in the previous session, was down 0.2 percent at $671.93 an ounce at 1:18 p.m. in Singapore. Silver for immediate delivery traded little changed at $12.10 an ounce.
In Japan, gold for delivery in August rose 12 yen, or 0.5 percent, to 2,531 yen a gram ($679 an ounce) on the Tokyo Commodity Exchange at 2:21 p.m. local time.
Gold for December delivery fell 0.1 percent to $681.10 an ounce on the Comex division of the New York Mercantile Exchange at 1:15 p.m. Singapore time.
Indian Demand
Economic growth in India, the world's largest consumer of gold, will help limit gold's downside, according to James Steel, a metals analyst at HSBC Securities (USA) Inc. in New York.
South Asia's largest economy expanded 9.3 percent in the three months to June 30 from a year earlier, after gaining 9.1 percent in the previous quarter, the statistics bureau said in New Delhi on Aug. 31. That beat the median 9 percent forecast in a Bloomberg News survey of 18 economists.
``Some of the increase in personal disposable income that accompanies economic growth can be expected to end up supporting jewelry and other bullion demand,'' Steel wrote in a Aug. 31 report. The strength of the Indian rupee, partly resulting from economic growth, also helps to defray the rising cost of gold in local currency terms, he said.
A strike a Lihir Gold Ltd. mine, which halted production temporarily, is also seen as supportive for gold. The Papua New Guinea gold-mining company said today that it's `hopeful'' the strike may end in the next two days as the government steps in to try and resolve the dispute.
Gold rose the most in a week on Aug. 31 on speculation that a rally in equities would boost investment demand. The Morgan Stanley Capital International Asia-Pacific Index gave up early gains after Japan's government reported an unexpected drop in corporate investment and the steepest slide in wages in three years. It was little changed at 152.10 at 1:20 p.m. in Singapore.
``In Asia the market is primarily driven by physical buying and physical demand has slowed down at this price level,'' said Ellison Chu, manager of precious metals at Standard Bank Asia Ltd. in Hong Kong. ``Overall trading has been very quiet and is likely to stay this way for the rest of the day as the U.S. is closed for a holiday today.''
Gold for immediate delivery, which reached $674.66 an ounce in the previous session, was down 0.2 percent at $671.93 an ounce at 1:18 p.m. in Singapore. Silver for immediate delivery traded little changed at $12.10 an ounce.
In Japan, gold for delivery in August rose 12 yen, or 0.5 percent, to 2,531 yen a gram ($679 an ounce) on the Tokyo Commodity Exchange at 2:21 p.m. local time.
Gold for December delivery fell 0.1 percent to $681.10 an ounce on the Comex division of the New York Mercantile Exchange at 1:15 p.m. Singapore time.
Indian Demand
Economic growth in India, the world's largest consumer of gold, will help limit gold's downside, according to James Steel, a metals analyst at HSBC Securities (USA) Inc. in New York.
South Asia's largest economy expanded 9.3 percent in the three months to June 30 from a year earlier, after gaining 9.1 percent in the previous quarter, the statistics bureau said in New Delhi on Aug. 31. That beat the median 9 percent forecast in a Bloomberg News survey of 18 economists.
``Some of the increase in personal disposable income that accompanies economic growth can be expected to end up supporting jewelry and other bullion demand,'' Steel wrote in a Aug. 31 report. The strength of the Indian rupee, partly resulting from economic growth, also helps to defray the rising cost of gold in local currency terms, he said.
A strike a Lihir Gold Ltd. mine, which halted production temporarily, is also seen as supportive for gold. The Papua New Guinea gold-mining company said today that it's `hopeful'' the strike may end in the next two days as the government steps in to try and resolve the dispute.
Oil rises but base metals retreat
Oil prices rose on Monday amid concern about possible disruption to production in the Gulf of Mexico by Hurricane Felix while further support was provided by growing expectations that the Organisation of the Petroleum Exporting Countries will keep output quotas unchanged at its meeting next week.
ICE October Brent rose 64 cents to $73.33 a barrel while Nymex October West Texas Intermediate added 44 cents at $74.48 a barrel.
Trading volumes across commodity markets were thinner than normal due to yesterday’s US public holiday and dealers also noted reluctance to open new positions ahead of vital US economic data this week.
Analysts at Citigroup said during the current credit crisis, investors had not aggressively sold their commodity positions and did not appear poised to do so.
“Commodity prices have fallen no more than other asset classes,” said Alan Heap of Citigroup. “The fundamentals of commodity markets remain robust, and even if the US tips into a mild recession, the impact will be benign, thanks to China.”
The Baltic Dry Index, a gauge of global shipping costs, hit a record of 7,783, up 1 per cent. Sea freight costs have surged as the world fleet struggles to match demand. Merchant ships in the Atlantic are reported to be charging day rates of $125,000 for a year-long charter.
Copper fell 1.5 per cent to $7,385 a tonne amid reports that a ship carrying as much as 40,000 tonnes of the red metal had arrived in Shanghai, raising concerns that spot demand in China could be overwhelmed by the increase in supply. However, traders said the entire cargo was unlikely to be unloaded and noted that China imports around 120,000 tonnes of copper a month.
Nickel was almost unchanged at $29,835 a tonne, amid mounting evidence that the Asian stainless steel market is stabilising. A number of Asian steelmakers have said they will cut production and raise prices, supporting nickel.
Tin slipped 2.1 per cent to $15,150 a tonne supported by a fall of 185 tonnes in LME stocks, a fifth successive day of outflows.
Aluminium fell 2.4 per cent to $2,490 a tonne after a large increase of 12,900 tonnes in LME stocks.
Zinc retreated 2.4 per cent at $3,035 a tonne while lead lost 2.8 per cent at $3,025 a tonne.
The global primary aluminium market recorded a supply deficit of 70,000 tonnes in the first half of this year, due mainly to a significant increase in Chinese demand, according to the World Bureau of Metal Statistics. Global consumption was estimated at 18.44m tonnes in the first half of 2007, up by just over 10 per cent compared to the same period last year. Chinese demand is estimated to have risen by 46 per cent but European demand was also robust, increasing by 6 per cent. Global production rose by 11.6 per cent to 11.37m tonnes with China now accounting for almost one-third of world output.
Gold eased 1 per cent to $671.90 a troy ounce after rallying
ICE October Brent rose 64 cents to $73.33 a barrel while Nymex October West Texas Intermediate added 44 cents at $74.48 a barrel.
Trading volumes across commodity markets were thinner than normal due to yesterday’s US public holiday and dealers also noted reluctance to open new positions ahead of vital US economic data this week.
Analysts at Citigroup said during the current credit crisis, investors had not aggressively sold their commodity positions and did not appear poised to do so.
“Commodity prices have fallen no more than other asset classes,” said Alan Heap of Citigroup. “The fundamentals of commodity markets remain robust, and even if the US tips into a mild recession, the impact will be benign, thanks to China.”
The Baltic Dry Index, a gauge of global shipping costs, hit a record of 7,783, up 1 per cent. Sea freight costs have surged as the world fleet struggles to match demand. Merchant ships in the Atlantic are reported to be charging day rates of $125,000 for a year-long charter.
Copper fell 1.5 per cent to $7,385 a tonne amid reports that a ship carrying as much as 40,000 tonnes of the red metal had arrived in Shanghai, raising concerns that spot demand in China could be overwhelmed by the increase in supply. However, traders said the entire cargo was unlikely to be unloaded and noted that China imports around 120,000 tonnes of copper a month.
Nickel was almost unchanged at $29,835 a tonne, amid mounting evidence that the Asian stainless steel market is stabilising. A number of Asian steelmakers have said they will cut production and raise prices, supporting nickel.
Tin slipped 2.1 per cent to $15,150 a tonne supported by a fall of 185 tonnes in LME stocks, a fifth successive day of outflows.
Aluminium fell 2.4 per cent to $2,490 a tonne after a large increase of 12,900 tonnes in LME stocks.
Zinc retreated 2.4 per cent at $3,035 a tonne while lead lost 2.8 per cent at $3,025 a tonne.
The global primary aluminium market recorded a supply deficit of 70,000 tonnes in the first half of this year, due mainly to a significant increase in Chinese demand, according to the World Bureau of Metal Statistics. Global consumption was estimated at 18.44m tonnes in the first half of 2007, up by just over 10 per cent compared to the same period last year. Chinese demand is estimated to have risen by 46 per cent but European demand was also robust, increasing by 6 per cent. Global production rose by 11.6 per cent to 11.37m tonnes with China now accounting for almost one-third of world output.
Gold eased 1 per cent to $671.90 a troy ounce after rallying
BP is ready to grab oil, gas opportunities
Dubai: BP is ready to compete for the opportunities that arise in Iraq’s oil and gas sector once the country passes its oil and gas law, a senior executive said yesterday. Iraq’s parliament has yet to debate the controversial oil law, but was expected to consider it this month. Washington has pushed Iraq for months to speed up passage of the oil law, which is among legislation it sees as pivotal to reconciling warring Iraqis and attracting foreign investment. “We’ve studied all of Iraq and absolutely have a view on which are the relatively good looking prospects,” Steve Peacock, president of BP’s Middle East and South Asia Exploration and Production unit, told Reuters on the sidelines of a conference in Dubai. “Whether it turns out to be a licensing round or some other form of offering, we’re ready.” Iraq’s oil minister said last month the government hopes to call an open tender to develop its oilfields as early as this month if the law was passed. Developing the oil sector and boosting export revenues are key to reconstructing the country’s shattered economy. The contracts and terms that Iraq may offer oil companies to work on its prized oilfields have yet to be defined. The type of contract was much less important than ensuring the terms were attractive for both the oil company and the government, Peacock said. “There are many forms of contract that can find that sweet spot in the middle,” Peacock said. Oil companies tend to regard short-term service agreements as less of a lure than longer-term production sharing agreements. Service agreements could be attractive if the terms compensate for the skills, tools and experience that international oil companies bring to the table, Peacock said. BP would be unable to send people to work in Iraq until the security improves, he said. “We hope that happens soon for the sake of Iraqi people, not just so that we can go in and do business,” he said. Recommendations that BP has made to Iraq on the southern Rumaila oilfields have had a positive effect on output there, Peacock said. Studies that BP carried out on Rumaila, one of Iraq’s largest oilfields, showed that production could be boosted quickly with application of modern techniques, he added. He declined to detail the potential increase. “This ought to be encouraging for Iraq, although I can’t say if all the fields look lie Rumaila.”Years of war and sanctions and more recently insecurity have led to chronic underinvestment in Iraq’s oil sector and led to concern of permanent damage to oil reservoirs at fields such as Rumaila. BP, like many other international oil companies hoping for eventual access to the world’s third largest oil reserves has a memorandum of understanding with Iraq’s central government to provide technical assistance and training. BP was also looking at gas and alternative energy opportunities in Iraq, he said. BP was eyeing potential opportunities for growth in the Middle East in Jordan, Kuwait, the United Arab Emirates and Oman, Peacock said. BP’s focus for new opportunities was on producer plans to boost oil capacity and recovery rates and also developing supplies to meet the region’s rapidly growing gas demand, he said. – Reuters
Bush, Fed credit moves may ‘derail’ economic expansion
WASHINGTON: US Federal Reserve chairman Ben Bernanke has pledged to act to limit the spillover of a credit crunch on the broader economy, as the White House unveiled aid to homeowners facing foreclosure.The two separate announcements on Friday were aimed at curbing contagion from a housing crisis that some fear could derail the US economic expansion by causing credit markets to freeze up further.In his morning radio address yesterday, President George W Bush described the turmoil as the mortgage industry “going through a period of adjustment,” and said he had “made it a priority to help American homeowners navigate these financial challenges.”Bernanke, in his first public remarks since global markets were roiled by fears of a liquidity crisis, said the Fed wanted to avoid “further tightening of credit conditions,” which could have “adverse effects on consumer spending and the economy more generally.”“The (Fed) continues to monitor the situation and will act as needed to limit the adverse effects on the broader economy that may arise from the disruptions in financial markets,” Bernanke added.Markets viewed the remarks as opening the door to a potential interest rate cut that could lower overall borrowing costs and stimulate credit markets.Stephen Gallagher, economist at Societe Generale in New York, said the Fed “continues to embrace the market with tough love, but will do what is necessary,” including a cut in the federal funds rate if necessary, on September 18.Some analysts argue that Bernanke does not want to be too quick to cut rates, for fears of sparking inflation and being seen as bailing out investors who made risky bets.But Robert DiClemente, economist at Citigroup, said he believes that “the speed and magnitude by which the overall financial setting has deteriorated are consistent with downside risks ... that justify policy (rate) action.”Meanwhile, Bush outlined a series of actions aimed at averting foreclosure for distressed homeowners, many of whom are facing a crisis as adjustable-rate mortgages are reset to reflect higher rates.One measure he announced would allow homeowners with a good credit history but who cannot afford their current payments to refinance into federally insured mortgages, likely at lower rates.He also encouraged lenders to try to work out payment arrangements with financially strapped homeowners and urged Congress to pass additional relief measures.Analysts said the measures would only affect a small fraction of the estimated 2mn homeowners facing foreclosure.Bush insisted the federal government has only a “limited” role to play in helping millions of people now struggling to hold onto their homes amid rising interest rates.The federal government, Bush said yesterday, “will not bail out lenders—because that would only make a recurrence of the problem more likely.“And it is not the government’s job to bail out speculators, or those who made the decision to buy a home they knew they could never afford.“But I support action at the federal level that will help more American families keep their homes.”Among other measures Bush called on Congress to change parts of the federal tax code “that will protect homeowners from having to pay taxes on cancelled mortgage debt.”Bernanke, speaking at a Fed symposium in Jackson Hole, Wyoming, did not directly speak about the next move on interest rates, but appeared to be aiming to allay concerns that the Fed would do nothing to prevent a broader credit crunch that drags down the economy.But DiClemente said Bernanke’s comments “reinforced expectations of an upcoming reduction in the funds target.”The bank has kept its main federal funds rate at 5.25% for over a year but on August 17 cut the discount rate for direct loans from central bank a half-point to 5.75% in an effort to promote credit flows.Bernanke said incoming reports suggest the world’s biggest economy “continued to expand at a moderate pace” but that the outlook has become somewhat murkier in view of the financial market turmoil of recent weeks.
World gold demand on recovery path, prices to move up on buying pressure
LONDON: Global gold demand is set to pick up with the end of summer doldrums and the last quarter may see more buying than last year as prices have been less volatile, analysts and traders say. Growing acceptance of higher bullion prices and rapid economic growth in key consuming nations would lift gold buying, which is already on a recovery path after falling by nearly 10% last year due to volatile markets. Spot gold traded in a wide range of more than $200 an ounce in 2006, when it hit a 26-year high of $730. But the metal has been less choppy this year, with prices ranging in a band of less than $100. The metal was quoted at around $668 yesterday. “I suspect as we move towards the latter part of the year, the buying pressure will increase in line with the fact that we are heading towards the Christmas period, the Chinese New Year etc.,” said Darren Heathcote of Investec Australia in Sydney. World identifiable demand for gold rose about three% to 822 tonnes in the first quarter of 2007 from the same period last year and by more than 19% to 922 tonnes in the April-June period, according to the World Gold Council. China’s gold demand is likely to remain robust after surging 31% in the first half of 2007, Turkey’s gold imports could set a new record this year and buying in the Middle East may go up with festivals and a rising number of tourists. There has been no sign of a decline in jewellery demand in the US despite the potential for an economic slowdown, but demand in Japan may slip this year due to high gold prices in the local currency, traders and an industry official said. “We are seeing a very significant restocking process going on in the markets, primarily for India, as we are heading to the heavy festival season,” said Andy Montano, a director at bullion dealer ScotiaMocatta in Toronto. India, the world’s top gold buyer consuming a third of world gold output, is expected to see strong buying in the festival season that picks up in September and peaks in November with Diwali – the festival of lights. “Demand for gold will be significant in markets like India, the Middle East and other Asian countries. In these countries, economic and capital markets growth have been very good and investors allocate a surplus of that to gold,” said Gnanasekar Thiagarajan, director at India’s Commtrendz Research Management. India’s economic growth rate of about 8% has put surplus money in the pockets of its middle class, and many are likely to be drawn to the traditional form of savings in gold. Some analysts said gold demand in the festival season this year was likely to rise by 15 to 20% from last year. “The robust economic growth in the Middle East and India has left the economy awash with cash. Since most of these additional funds flow to fresh investments, strong physical demand can be expected,” Pradeep Unni, metals analyst at Dubai’s Vision Commodities Services, said. Jewellery, which accounts for about 75% of Indian gold demand, is also seen as a symbol of wealth in the country and forms an important part of dowry, as parents prefer to gift gold to their daughters for financial security.
Subscribe to:
Posts (Atom)
