Poor non farm leads to radical gains

Gold futures got a boost on the disappointing jobs data, which put to rest recent sentiments that the Federal Reserve may consider tightening policy in the coming months.

The U.S. Bureau of Labor Statistics reported earlier the economy added 88,000 nonfarm payrolls in March, way below expectations for a gain of 200,000 and below the 268,000 jobs added in February.

The private sector added 95,000 jobs last month, after an increase of 254,000 in February, missing expectations for a 209,000 rise.

The report also showed that the U.S. unemployment rate ticked down to 7.6 per cent in March, from 7.7 per cent the previous month, as more Americans left the labor force.

The news sent the dollar falling and gold rising on expectations for the Federal Reserve to keep monetary stimulus programs in place, including its USD85 billion monthly bond-buying program that weakens the greenback as a side effect.

The June COMEX gold futures had tumbled to 10 month low of $1539.4 earlier this week, however it jumped back to end the fortnight at $1575.9 an ounce.

It rallied to a one-month peak in March on worries about fiscal stability in Europe, as politicians scrambled to clinch a bail-out for Cyprus.

Fear that central banks' money-printing to buy assets will stoke inflation has been a key driver in boosting gold, which rallied to an 11-month high in October after the Fed announced its third round of aggressive economic stimulus.

The international gold prices are down nearly $80 from its last year's level as the US dollar has appreciated.

The June COMEX gold futures are trading at $ 1575.9 an ounce as on 5th April 2013 whereas last year the metal has been trading near $1650 an ounce levels.

The US dollar has gained nearly 2 per cent in April 2013 compared to the same period last year.

However the MCX gold futures are trading higher than it was during the same period last year.

The MCX June gold futures finished at Rs 29710 per 10 grams on 5th April 2013 whereas during the same period last year gold prices were hovering around Rs 27500-28000 levels.

One reason for this difference is depreciation in the Indian currency. The Rupee is down nearly 9 per cent at 54.88 per US dollar as compared to 50.5 in March 2012.

The Rupee is expected to depreciate further in the new fiscal year because a weak currency is desirable to fix India's current account.

The shortfall in India's current account, the broadest measure of trade, widened to $32.6 billion in the quarter ended 31 December, or 6.7 per cent of gross domestic product, as imports of oil and gold surged

Silver Updates

Gold futures climbed back in Asia electronic trades today on value buying following a fall of nearly $40 yesterday touching a low of $1705.50 an ounce ignoring the optimism over the U.S. fiscal-cliff talks that boosted other risk assets.
December gold futures rose $3.6, to $1,720.1 an ounce in electronic trading on the Comex division of the New York Mercantile Exchange. Yesterday, it dropped $25.80, or 1.5%, to settle at $1,716.50 an ounce. It fell by as much as $36.80 to touch a low of $1,705.50 during the session.
Today, the advance came as the ICE dollar index, a gauge of the greenback’s moves against a basket of six other major currencies, was little changed at 80.268, compared with 80.262 in North American trade late Wednesday.
Gold investors shrugged off U.S. President Barack Obama and House Speaker John Boehner’s optimism that lawmakers would reach an agreement to avert the fiscal cliff. Uncertainty related to the cliff — a reference to the possibility that $600 billion worth of tax increases and spending cuts will kick in from January unless politicians reach an agreement.
MCX December gold futures may open today’s session near Rs 32300 levels with resistance near Rs 32350 levels.

Silver Updates

Bullion metals ended lower at Comex on Tuesday, 27 November 2012. Gold prices ended lower for second straight day as the dollar headed up and a sort of debt deal was reached at Greece. Upbeat US data also took some shine away.

Gold for December delivery fell $7.3 (0.4%) to settle at $1,742.3 an ounce on the Comex division of the New York Mercantile Exchange on Tuesday.

On Tuesday, December silver fell 16 cents, or 0.5%, to settle at $33.98 an ounce.

In overnight trading, the European stock markets rallied only modestly on news that Euro zone leaders meeting in Brussels agreed late Monday to disburse fresh bailout funds to cash-starved Greece. Most market watchers had reckoned EU leaders would grant new monies to Greece. The world market place showed no significant reaction to the as-expected news on Greece.

A meeting to discuss Greece's finances wrapped up early Tuesday with Greece's institutional lenders reaching a deal to pave the way for Athens to receive almost 44 billion euros (almost $57 billion) of financial aid, while bringing its debt down to a sustainable level. The deal is expected to trigger another aid payment for the debt-struck country.

A heavy slate of U.S. economic data released Tuesday did show generally better-than-expected readings overall, and that put modest upside pressure on the U.S. dollar index, which in turn helped push gold and silver prices to their daily lows.

The dollar index, which weighs the strength of the dollar against a basket of six other currencies, rose by 0.2% on Tuesday. The Euro currency also was initially supported on the Greece news but could not hold those gains as the day wore on.

In today's economic news at Wall Street, Consumer confidence rose in November to its best reading in more than four years. The latest consumer confidence reading for November came in at 73.7, while market expected a reading of 73.0. The Conference Board said its consumer confidence index rose to 73.7 in November from 73.1 in October. That's above the 72.2 level forecast. The October reading was upwardly revised from 72.2.

Separately, the September Housing Price Index from the FHFA increased by 1.1%, which follows a 0.7% increase observed during the prior month. Also, the September Case-Shiller 20-city Home Price Index rose by 3.0%, while a 3.1% increase had been expected. This followed the previous month's increase of 2.0%.

Durable goods orders were unchanged in October, which was better than the 0.4% decrease that had been expected. Excluding transportation related items, durable goods orders increased in October by 1.5%, which was better than the 0.4% decrease that had been broadly anticipated. Prior month's reading was revised down to reflect an increase of 1.7%.

Traders and investors are also focused on the negotiations among U.S. lawmakers and President Obama regarding the so-called “fiscal cliff” tax increases and spending cuts that are approaching.

At the MCX, gold prices for February delivery closed lower by Rs 149 (0.45%) at Rs 32,594 per ten grams. Prices rose to a high of Rs 32,825 per 10 grams and fell to a low of Rs 32,550 per 10 grams during the day's trading.

At the MCX, silver prices for December delivery closed lower by Rs 198 (0.31%) at Rs 63,536/Kg. Prices opened at Rs 63,877/kg and fell to a low of Rs 63,361/Kg during the day's trading.

MCX Gold & Silver Updates

Gold Holdings at all-time high:

The positive U.S. GDP report announced last week has meant improved risk sentiment & the recent pullback in Gold Prices has attracted physical demand and investor buying. With this GDP report, it’s been 13 months that the economy has actually expanded. Gold market traders are again getting to be the most bullish in three weeks as investors’ bullion holdings rose to a record on Friday 26 – 2012. Investors boosted holdings in exchange-traded products to an all-time high of 2,585.1 metric tons, valued at $142.4 billion, data compiled by Bloomberg show. Hedge funds’ bets on a rally are near the biggest in more than a year, according to U.S. CFTC – Commodity Futures Trading Commission data. Central banks from Europe to China to the U.S. have pledged to do more to boost economies. The yen reached a four-month low versus the US Dollar this week on speculation the Bank of Japan (8301) will further expand stimulus and the Federal Reserve said it plans to continue buying bonds. A QE4 can be expected from the US Federal Reserve or an expansion to the QE3 when Operation Twist finishes in two months by December end. The BOJ, which holds a policy meeting Oct. 30, will consider raising its asset-purchase program by 10 trillion yen ($125 billion) to 90 trillion yen, the Nikkei newspaper reported. Inflation expectations measured by the break-even rate for five-year Treasury Inflation Protected Securities jumped 33% this year and reached a 16-month high in September. Gold ETP holdings gained 7.9% since the end of July and now account for almost a year of mine production.

Gold Silver Tips

Much of the current weakness in Gold Futures appears to be only technical in nature. Some traders are exiting positions on disappointment that gold has not able to break above $1,800, particularly after a chart reversal on Oct. 5 when the monthly U.S. jobs report was released. But for the Long term, nothing has changed drastically, except maybe a lack of conviction on failing to cross the $1800 level. Technically speaking, Gold and Silver are both near their short term bottom & could take an upswing. Gold has a reasonable support near the minor congestion area of $1720 – $1726.3 range whereas Silver has support in the $32.05 to 32.41 ranges. This range can provide near-term buying interest. On a remote possibility of longs liquidation occurring on the current Gold Prices softening, if Gold slips below $1720, then Gold Prices may lose the upside advantage & could be seen hurtling towards $1666. Silver, though seems more sustainable on the upside levels, could lose steam if closes below $32 & then could slump to $30.25 also. There is the minor risk of more weakness if support levels in Gold & Silver do not hold. Gold Holdings by exchange-traded products are higher so far in October. Gold ETP holdings continue to flourish with inflows of 10.1 (metric) tons over the past week, taking flows for the month to date to over 30 tons. Inflows for the year to date have now reached 224 tons, surpassing the full year last year (175 tons) but still below y/y flows for 2010 (361 tons). Gold buying of 1.33 million ounces so far in October by Gold ETFs is about 52% of the September inflows. A potential upside catalyst occurs later this week when leaders gather for a European Union summit.

Commodity Buzz : Economic

Brent futures held steady near USD 114 on Wednesday as expectations Europe's financial crisis is on the mend renewed hopes of a revival in oil demand growth, while simmering tension in the Middle East provided additional support.

Asian shares, the euro, base metals and gold all rose after Moody's Investors Service affirmed its investment grade rating on Spain, helping ease investor worries of a worsening crisis in the region. Oil was also supported by supply concerns as the European Union slapped fresh sanctions on Iran.

Brent slipped 12 cents to USD 113.88 a barrel by 0432 GMT. The November contract, which expired on Tuesday, went off the board 73 cents lower at USD 115.07, while the December one settled 40 cents lower at USD 114.00. US oil gained 18 cents to $92.27.

"We are seeing prices react to the investment grade news for Spain, but the demand outlook continues to look weak because of the global economic condition," said Victor Shum, managing director at IHS Purvin and Gertz in Singapore. "Prices are drawing support from supply concerns in the Middle East."

European Union governments imposed sanctions against major Iranian state companies in the oil and gas industry and strengthened restrictions on the central bank.

More than 30 firms and institutions were listed in the EU's Official Journal as targets for asset freezes in the EU, including the National Iranian Oil Company (NIOC), a large crude exporter, and the National Iranian Tanker Company (NITC).

The United States and the European Union are putting pressure on Iran to stop its disputed nuclear programme, while Tehran says it needs the technology to generate electricity.

Silver Updates

Silver is currently trading in oversold conditions, the lower end of the Bollinger Band indicates support for Silver around Rs 61,200-odd levels.

On Monday, Silver bounced back after touching a low of Rs 61,043. One can look to buy Silver with a stop around Rs 61,000-odd levels. However, in case, Silver breaks below Rs 61,000, it can drop to Rs 60,000-odd levels.

On the upside, a pull-back rally can see Silver jump to Rs 62,800-odd levels.

As per the daily Fibonacci charts, Silver MCX December futures today may seek support around Rs 61,250-61,125-61,000, and on the upside Silver is likely to face resistance Rs 61,700-61,850-62,100.

The corresponding key levels for Silver Micro November futures are as follows - support around Rs 61,200-61,130-61,030, while resistance around Rs 61,750-61,850-61,950.


MCX Gold futures are trading in the negative territory, tracking the steep losses in the global prices and worries over demand in the near term. The metal has been trading lower in the last few days and tested a one month low on COMEX yesterday as the downward correction extended further amid sound US retail sales numbers and a surge in the US equities. COMEX Gold futures are quoting at $1738, nearly unchanged on the day.

The yellow metal has witnessed a sizeable fall in last two sessions, shedding nearly 50 dollars per ounce amid a flurry of profit selling as the inability of the metal to break above $1800 per ounce levels had a depressing effect on the sentiments. The commodity normally follows risky assets and yesterday's massive jump in stock markets should have helped it. However, the persistent worries over Indian demand scenario in the just about to get underway-festive season are making futures market traders take it easy.

Meanwhile, the US retail sales were boosted by the launch of iPhone 5 and registered 1 a rise of 1.1% in September. Equity markets were further boosted on media reports that Spain is ready to make a formal request for aid, allowing the European Central Bank to buy its sovereign debt, but is delaying an announcement due to concern about the effect on other euro-zone members.

Asian shares are trading higher on a steady note and some buying has emerged in Gold as well. While this has helped it gain some ground from its one-month low levels of $1728 per ounce, the fall in last two sessions has done a considerable damage. The local MCX Gold futures broke under Rs 31000 per 10-gram mark yesterday and extended this drop further today. The metal quotes at Rs 30869, down Rs 108 per 10 grams or 0.35% with 2% rise in the open interest. The counter had dropped more than Rs 300 yesterday.