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Bullions may remain on volatile path on various uncertainties in October 2016

SMC | 06 Oct, 2016  | Follow Author | Add to my Favourites 
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In the month of September, bullion moved in narrow range as fear of rise in interest rate kept the upside capped while weaker greenback supported its prices. In the month of September silver outperformed gold on strong silver ETF demand. Overall gold traded in range of 30560-31466 in MCX and $1304-1354 in COMEX. Silver traded in range of $18.73-20.10 in COMEX and 43832-47694 in MCX. The US Federal Reserve's decision to keep interest rates unchanged has supported gold prices. In the last month meeting Fed stayed pat on interest rates in the world's biggest economy. But it also indicated it could still tighten monetary policy by the end of the year as the labor market improved further. Gold is highly exposed to interest rates, particularly in the United States, as higher rates lift the opportunity cost of holding non-yielding assets and boost the dollar, in which gold is priced. Holdings of SPDR Gold Trust, the world's largest gold-backed exchange-traded fund stood nearly 950.92 tonnes. Silver long term outlook looks brighter on growing demand. According to the World Silver Survey, total supply in 2015 worked out to 1.04 billion ounces, but demand increased year-over-year by 39 million ounces to 1.17 billion ounces.


In the month of October bullions may continue to remain on volatile path as lack of safe haven demand and fear of interest rate hike later this year can keep prices under pressure while fall in greenback an festival related demand in India can cap the downside. The gold/silver ratio can move in range of 65-72 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 65.5- 67.5 in the month of October. Gold can trade in range of Rs 30200-31800 in MCX and $1285- 1360 in COMEX. Silver can trade in range of 43000-48000 in MCX and $18-20.50 in COMEX. SPDR Gold Trust GLD, the world's largest gold-backed exchange traded fund holdings stood at 949.14 tonnes. According to the World Gold B Council” India's gold demand is likely to fall to around 750-800 tonnes in 2016, as against 860 tonnes last year, mainly due to sharp rise in prices and a strike by jewellers' following new regulations”. In August, the World Gold Council had reported that the country's gold demand fell by 30 per cent to 247.4 tonnes during the first six months of 2016 from 351.5 tonnes in the year-ago period. India's gold imports fell to 291 tonnes in the first six months of this year from 470 tonnes in the year-ago period on weak demand. Meanwhile Silver prices have jumped 39% since the start of 2016, driven by hedging demand amid record central bank intervention around the globe.

Key News

US Mint Coin Sales Strengthen in September U.S. Mint bullion sales improved for a second month in a row — solidly for gold coins and more modestly for silver coins. In headline bullion coin comparisons: ŸAmerican Eagle gold coins advanced 94,000ounces in September for their best month since April. They jumped 60.7% from the August total of 58,500 ounces but slid 25.1% from the 125,500 ounces delivered in September of last year. Year to date sales total 692,000 ounces for a 3.3% increase over the 670,000 ounces sold during the first nine months of 2015. ŸAmerican Buffalo gold coins moved up 17,500 ounces last month, rising 94.4% from August sales of 9,000 ounces but falling 20.5% from the 22,000 ounces sold in September 2015. Sales from the January to September period at 149,000 ounces are 12.6% lower than the 170,500 ounces sold during the same time last year. ŸAmerican Eagle silver coins advanced 1,675,000 ounces in September, up 30.9% from the August tally of 1,280,000 ounces — their lowest monthly total since December 2013. However, they tumbled 56% from the 3,804,500 ounces delivered in September of last year. Sales of 2016 American Silver Eagles are at 30,575,500 coins for a 15.2% decline from the 36,054,500 coins delivered during the same period in 2015.

In the month of Oct 2016 bullions may remain on volatile path on uncertainty regarding interest rate hike, US elections and festival related demand in India. Movement of greenback will give further direction to the prices along with global stock markets. Moreover condition of global economy and movement of local currency rupee coupled with Physical, ETF demand and fed interest rate decision will also influence its prices.


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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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