London: Weak Japanese GDP data, following a shock fall in US job creation, hardened prospects that the Bank of Japan (BoJ) will hold interest rates steady and the Federal Reserve will cut them to temper the worst effects of a credit crisis.
Central bankers, gathered in the Swiss city of Basel for regular talks on Monday, registered their concern that the upheaval, stemming from mass defaults on US subprime mortgages lent mainly to poor people, would inflict wider economic pain.
"To the extent that this affects the real economy and in particular the US economy then we will see that the second round effects are likely to impact the whole world," Mexico's Central Bank governor Guillermo Ortiz said.
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Japan's economy contracted more than expected in the second quarter, reinforcing views that the BoJ is unlikely to raise rates anytime soon amid a global credit squeeze.
Economists had expected a weak number but the 0.3 per cent fall was bigger than the market forecast for a 0.2 per cent contraction.
That followed data on Friday showing US payrolls shrank in August for the first time in four years, suggesting the credit squeeze was beginning to stifle growth there. While the Japanese GDP number disappointed, finance minister Fukushiro Nukaga said he expected the economy to continue recovering and did not think Japan would be hit hard by the global financial turbulence.
Monday, September 10, 2007
Indian gold seen rising on weak dollar, Asian demand
MUMBAI (Reuters) - Indian gold is expected to aim higher this week, riding the bullish momentum that saw it break the important $700 an ounce mark last week, analysts said.
The possibility of a U.S. interest rate cut and expectations of Asian demand were seen winning over lower crude prices and likely European Central Banks' sale in influencing gold, they added.
"The bull rally that people where waiting for, has possibly just begun," said Sahil Kapoor, research associate at Kotak Commodity Services Ltd.
"The key driver is expectations of demand in India... plus the dollar has been weak against major international currencies."
Chances of an interest rate cut by the Fed on Sept. 18 may continue to keep the pressure on the dollar, that generally has an inverse relationship with gold.
Last week's data showing big job cuts in the U.S. raised expectations of a cut in interest rates.
This week, analysts said, they would be eyeing several U.S. economic indicators such as consumer sentiment, jobless claims and industrial production for a reaffirmation.
The possibility of a U.S. interest rate cut and expectations of Asian demand were seen winning over lower crude prices and likely European Central Banks' sale in influencing gold, they added.
"The bull rally that people where waiting for, has possibly just begun," said Sahil Kapoor, research associate at Kotak Commodity Services Ltd.
"The key driver is expectations of demand in India... plus the dollar has been weak against major international currencies."
Chances of an interest rate cut by the Fed on Sept. 18 may continue to keep the pressure on the dollar, that generally has an inverse relationship with gold.
Last week's data showing big job cuts in the U.S. raised expectations of a cut in interest rates.
This week, analysts said, they would be eyeing several U.S. economic indicators such as consumer sentiment, jobless claims and industrial production for a reaffirmation.
Turnover on commodity exchanges dips by 5 pc
New Delhi, Sept. 11 (PTI): The turnover of commodity exchanges in the country dropped by five per cent to Rs 14,83,273 crore till August 31 in the current fiscal against Rs 15,63,096 crore in the corresponding period last year.
According to data released by commodity market regulator Forward Markets Commission, futures trading in three national level commodity exchanges and 20 regional bourses stood at Rs 1,57,919.86 crore during the second fortnight of last month, down by 3.39 per cent, compared to the year-ago period.
During August 16-31 period, the turnover of leading bourse MCX stood at Rs 117,111.19 crore, while another agri- commodity bourse NCDEX recorded a business of Rs 35,173.45 crore. The other national level exchange, Ahmedabad-based NMCE, registered a turnover of Rs 675.65 crore.
The ban on futures trading of wheat and some pulses has hit hard on the trade of agri commodities.
Among regional bourses, Indore-based National Board of Trade, which mainly deals in soya oil, showed an impressive turnover of Rs 3,486.37 crore in the second fortnight of August.
Of the traded commodities at MCX, gold, copper and silver recorded the highest volume, according to FMC, which releases the trade data every fortnight.
The near month contract (August 2007) in gold quoted at its highest at Rs 8,950 per 10 gm on August 31 and the total value of trade in all gold contracts was Rs 8,786 crore. Copper turnover at MCX was Rs 24,499.68 crore, while silver trading was Rs 25,376 crore.
At NCDEX, guar seed trading surpassed the precious gold with a turnover of Rs 9,870.93 crore. Gold recorded a business of Rs 3,657.62 crore.
According to data released by commodity market regulator Forward Markets Commission, futures trading in three national level commodity exchanges and 20 regional bourses stood at Rs 1,57,919.86 crore during the second fortnight of last month, down by 3.39 per cent, compared to the year-ago period.
During August 16-31 period, the turnover of leading bourse MCX stood at Rs 117,111.19 crore, while another agri- commodity bourse NCDEX recorded a business of Rs 35,173.45 crore. The other national level exchange, Ahmedabad-based NMCE, registered a turnover of Rs 675.65 crore.
The ban on futures trading of wheat and some pulses has hit hard on the trade of agri commodities.
Among regional bourses, Indore-based National Board of Trade, which mainly deals in soya oil, showed an impressive turnover of Rs 3,486.37 crore in the second fortnight of August.
Of the traded commodities at MCX, gold, copper and silver recorded the highest volume, according to FMC, which releases the trade data every fortnight.
The near month contract (August 2007) in gold quoted at its highest at Rs 8,950 per 10 gm on August 31 and the total value of trade in all gold contracts was Rs 8,786 crore. Copper turnover at MCX was Rs 24,499.68 crore, while silver trading was Rs 25,376 crore.
At NCDEX, guar seed trading surpassed the precious gold with a turnover of Rs 9,870.93 crore. Gold recorded a business of Rs 3,657.62 crore.
Malabar Gold plans overseas foray
Malabar Crystals and Diamonds (P) Ltd, the jewellery retail chain and part of the Kozhikode-based Rs 800 crore Malabar Group, is planning to foray into the overseas market next year. The company is looking to open stores in Dubai, Qatar, Kuwait, Bahrain and Muscat.
It also plans to expand its network in the country and intends to open 12 more stores in 2008. The company has 17 stores in the country and by the end of 2007, it will touch the 20-mark, said Asher, managing director, Malabar Gold.
He said the company will invest close to Rs 200 crore for funding this expansion. Each outlet will see an investment of about Rs 15-20 crore and the funds will be raised from a group of individual investors, he said.
“We are already functioning out of Dubai with a wholesale division and will open our first retail outlet there by March 2008. With this, we wish to sell gold to the expatriate Indian community there,” Asher said.
Malabar Gold is opening its second outlet in Bangalore on Wednesday and will open its third outlet next year.
It is also looking to open outlets in Mysore, Vijayawada, Chennai, Coimbatore, Salem and Erode in the next few months, he added.
It also plans to expand its network in the country and intends to open 12 more stores in 2008. The company has 17 stores in the country and by the end of 2007, it will touch the 20-mark, said Asher, managing director, Malabar Gold.
He said the company will invest close to Rs 200 crore for funding this expansion. Each outlet will see an investment of about Rs 15-20 crore and the funds will be raised from a group of individual investors, he said.
“We are already functioning out of Dubai with a wholesale division and will open our first retail outlet there by March 2008. With this, we wish to sell gold to the expatriate Indian community there,” Asher said.
Malabar Gold is opening its second outlet in Bangalore on Wednesday and will open its third outlet next year.
It is also looking to open outlets in Mysore, Vijayawada, Chennai, Coimbatore, Salem and Erode in the next few months, he added.
JP Morgan expects gold to trade $720/oz in H1 2008
NEW YORK, Sept 10 (Reuters) - J.P. Morgan Securities said on Monday it expects gold to rise to $720 an ounce in the first half of 2008 because of a robust physical market, stressed mine output and reduced scrap supply.
"We believe that we are seeing the reemergence of gold as a safe-haven asset, which if true implies that the recent correlation between equities and spot gold will break down," J.P. Morgan said in a research note.
The New York brokerage also forecast both gold and platinum to respectively outperform silver and palladium .
J.P. Morgan said the six-month price target for gold is $715 an ounce, and $1,315 for platinum.
Spot gold broke above the psychological $700 level on Friday. It traded around $704 an ounce on Monday. Meanwhile, platinum was quoted at around $1,290 an ounce on Monday.
"We believe that we are seeing the reemergence of gold as a safe-haven asset, which if true implies that the recent correlation between equities and spot gold will break down," J.P. Morgan said in a research note.
The New York brokerage also forecast both gold and platinum to respectively outperform silver
J.P. Morgan said the six-month price target for gold is $715 an ounce, and $1,315 for platinum.
Spot gold
Fed adds $2.75 bln temporary reserves in overnight repo
NEW YORK, Sept 10 (Reuters) - The U.S. Federal Reserve on Monday said it added $2.75 billion of temporary reserves to the banking system through an overnight repurchase agreement.
Federal funds traded steady in the market at 5.00 percent after the amount was announced, below the 5.25 percent target rate the Fed sets.
The Fed said it accepted as collateral in the repurchase operation $2.07 billion of Treasuries, $340 million of agency debt and $340 million of mortgage-backed securities.
A total of $30.05 billion in bids were submitted for the operation.
Federal funds traded steady in the market at 5.00 percent after the amount was announced, below the 5.25 percent target rate the Fed sets.
The Fed said it accepted as collateral in the repurchase operation $2.07 billion of Treasuries, $340 million of agency debt and $340 million of mortgage-backed securities.
A total of $30.05 billion in bids were submitted for the operation.
Gold holds above $700, eyes 26-year high
LONDON - Gold traded above the key $700 level today, within sight of a 16-month high, as a weaker dollar and bullion’s safe-haven appeal attracted fresh buying.
The metal is closing in on a 26-year high of $730 an ounce hit in May last year and is roughly $145 below its all-time high of $850, fixed in London on January 21, 1980.
"Gold is set to remain strong around $700 as a pivot level. The currencies have enabled gold to take-off and the metal has now uncoupled from currencies.
"We are again running into a self-motivated trend where buying attracts buying," Frederic Panizzutti, metals analyst at MKS Finance, said.
"The move has been impressive and we might see some profit taking, but the market is definitely aiming (for) $720 as the next target. We expect the market to remain volatile in the coming days and would not be surprised to see another rally."
Spot gold touched an intraday peak of $706,60 before paring gains to $703,45/704,05 by 1403 GMT, still up from $699,90/700,70 quoted late in New York on Friday, when it rallied to its highest since mid-May 2006 at $707,10.
Friday’s unexpectedly weaker US non-farm payrolls data dented the dollar, making dollar-priced gold cheaper for holders of other currencies.
The dollar hit a 15-year low against a basket of currencies today as the data, showing companies cut 4 000 jobs last month, stoked expectations for a hefty Federal Reserve rate cut this month.
A crunch in global credit markets stemming from problems in the US subprime, or risky, mortgage sector has forced the world’s major central banks to inject emergency funds into the global financial system to prevent it grinding to a halt.
"Investors are getting more confident that bullion has hit a floor and is on the way back up," said Yuki Sonoda, advisor at Daiichi Commodities. "Finally, a gleam is in sight," he said, adding that a rise in gold held by exchange-traded funds (ETFs) showed steady appetite for gold by funds and other long-term investors.
The latest data showed gold held in New York-listed StreetTRACKS Gold Shares, the world’s largest gold-backed ETF, rose to 549,42 tonnes, another record high, up 33,98 tonnes or 6,6% from the start of the month.
"We would not be short gold here, however, as the chances of a self-fulfilling rally may occur if more options-related buying lifts the spot price through resistance levels, the most important of which is last years high of $730," John Reade, head of metals strategy at UBS Investment Bank, said in a note.
The metal is closing in on a 26-year high of $730 an ounce hit in May last year and is roughly $145 below its all-time high of $850, fixed in London on January 21, 1980.
"Gold is set to remain strong around $700 as a pivot level. The currencies have enabled gold to take-off and the metal has now uncoupled from currencies.
"We are again running into a self-motivated trend where buying attracts buying," Frederic Panizzutti, metals analyst at MKS Finance, said.
"The move has been impressive and we might see some profit taking, but the market is definitely aiming (for) $720 as the next target. We expect the market to remain volatile in the coming days and would not be surprised to see another rally."
Spot gold touched an intraday peak of $706,60 before paring gains to $703,45/704,05 by 1403 GMT, still up from $699,90/700,70 quoted late in New York on Friday, when it rallied to its highest since mid-May 2006 at $707,10.
Friday’s unexpectedly weaker US non-farm payrolls data dented the dollar, making dollar-priced gold cheaper for holders of other currencies.
The dollar hit a 15-year low against a basket of currencies today as the data, showing companies cut 4 000 jobs last month, stoked expectations for a hefty Federal Reserve rate cut this month.
A crunch in global credit markets stemming from problems in the US subprime, or risky, mortgage sector has forced the world’s major central banks to inject emergency funds into the global financial system to prevent it grinding to a halt.
"Investors are getting more confident that bullion has hit a floor and is on the way back up," said Yuki Sonoda, advisor at Daiichi Commodities. "Finally, a gleam is in sight," he said, adding that a rise in gold held by exchange-traded funds (ETFs) showed steady appetite for gold by funds and other long-term investors.
The latest data showed gold held in New York-listed StreetTRACKS Gold Shares, the world’s largest gold-backed ETF, rose to 549,42 tonnes, another record high, up 33,98 tonnes or 6,6% from the start of the month.
"We would not be short gold here, however, as the chances of a self-fulfilling rally may occur if more options-related buying lifts the spot price through resistance levels, the most important of which is last years high of $730," John Reade, head of metals strategy at UBS Investment Bank, said in a note.
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