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.