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Bullions: To remain on volatile path in the month of September

SMC | 13 Sep, 2016  | Follow Author | Add to my Favourites 
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In the month of August, bullion counter ended on lower note amid fear of rise in interest rate and stronger greenback. Overall gold traded in range of 30670-31939 in MCX and $1306-1374 in COMEX. Silver traded in range of $18.46-20.92 in COMEX and 43521-48445 in MCX. In the minutes of FOMC meeting in July fed officials were split on whether a rate increase would soon be warranted. While the Fed wants to keep options open on raising interest rates this year, some officials want to wait for further signs of growth and inflation. Gold prices seem to be stuck in a price range in recent weeks as the market awaits further clues on whether the Fed will raise rates. This has placed increased importance on Fed speeches, meetings and minute releases. Gold has benefited from the falling yield on other safe haven assets, in particular cash and bonds. In the current global economic scenario, gold demand is primarily driven by investment purposes rather than by aesthetic purposes. According to the World Gold Council, gold demand surged by 15% to 1,050 metric tonnes in the second quarter of 2016.


In the month of September bullions may continue to remain on volatile path as lack of safe haven demand and fear of interest rate hike can keep prices under pressure while euro zone concerns and fall in greenback can cap the downside. Recently in the first week of September gold fell at slower pace than silver as gold silver ratio recovered from 67 to above 70 levels. The gold/silver ratio can move in range of 68-73 in near term. On domestic bourses the movements of local currency rupee will be the key factor to watch out which can move in range of 66-68 in the month of September. Gold can trade in range of Rs 30800-32000 in MCX and $1300-1380 in COMEX. Silver can trade in range of 43000-48000 in MCX and $18- 20.50 in COMEX. Shifting expectations about the U.S. Federal Reserve's interest-rate policy is keeping the market on toes. Rising U.S. interest rates increase the opportunity cost of holding non-yielding bullion and boost the dollar, in which gold is priced. On physical demand front, in India it is poor due to high import duty though smuggling is on rise and this is the concern for the market. A spate of Fed speakers kept hopes alive for a September rate hike, despite some recently disappointing economic data including only a modest rise in U.S. nonfarm payrolls.

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SMC Research, founded in 1990, is India’s leading share and stock broker, provides a wide range of financial services and investment solutions. A blend of extensive experience, diverse talent and client focus has made us the 4th largest broking house in India(Source: Dun and Bradstreet, 2008). Over the years, SMC has expanded its operations domestically as well as internationally. Existing network includes regional offices at Mumbai, Kolkata, Chennai, Cochin, Ahmedabad, Jaipur, Hyderabad, Bangalore plus a growing network of 2100+ offices spread across 425 cities/towns in India.

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Disclaimer: The author has taken due care and caution to compile and analyse the data. The opinions expressed above are only the views of the author, and not a recommendation to buy or sell. Neither the author nor accept any liability whatsoever arising from the use of any of the above contents.

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