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Indian rupee records low against US dollar...

Indian rupee hits a record low against the dollar on Monday, on growing demand for oil  among importers. The fall is the one more blow towards the growth story of India, one of the emerging economies and 3 rd largest in Asia.Analysts and traders will now watch for any possible intervention from the central Reserve Bank of India to stem any further weakening of the currency.

The weaker currency makes imports costlier, especially of foreign oil on which India relies heavily, and will stoke already high consumer inflation.
The RBI has a policy of not commenting on movements in the forex market and has a stated policy of intervening only to curb volatility.

Investing in Gold: Here are some recommended methods

You can invest in gold through E-Gold, Gold mutual funds, Gold ETFs or gold bars and coins. Not to forget, many Indians buy gold jewelry that they will never use considering them as investment. Each of these has their own merits and demerits.

* E-Gold

Pros:

1. No recurring charges like expense ratio of mutual funds, ETFs involved.
2. Units as small as 1 gram can be redeemed for physical gold.
3. Greater price transparency.

Cons:
1. Separate trading account and demat account needed for trading in e-gold.
2. Not the best way to invest in terms of tax. It treated as physical gold for taxation.


* Gold ETFs

Pros
1. Units are backed by corresponding units of physical gold which are kept in secured vaults.
2. Returns close to that of e-gold.
3. Long term capital gains tax of 10% without indexation or 20% with indexation kicks in after 1 year. No wealth tax applies.

Cons:
1. Trading account and demat account needed for buying ETFs.

* Gold mutual fund
Pros
1. Through Systematic Investment Plan (SIP) of gold mutual funds one can affordably have disciplined investment in gold. One can invest as little as Rs 100 every month in gold funds.
2. Long term capital gains tax of 10% without indexation or 20% with indexation applies after 1 year. No wealth tax applies.

Cons
1. Expense ratio is higher than in gold ETFs.
2. Returns slightly lower than that of gold ETFs depending on fund’s performance.

* Physical gold

Cons
1. Banks charge premium is charged on gold bars and coins. Reselling them is difficult.
2. Storage costs and making charges involved. Issue of safety is also large.
3. Most unfavorable way in terms of tax. Long term capital gains tax of 20% with indexation applies only after 3 years of buying it. It attracts wealth tax.

Conclusion: If you own a demat account gold ETFs are the best form of gold investment for you. If you don't, choose gold mutual funds. E-Gold needs time to mature as a product and the separate account requirements are too demanding for those not accustomed to trading. While jewelry has value as consumption article, gold bars and coins should be avoided.

Not a Golden Chance...

 The RBI's efforts to contain gold imports by restraining credit for purchase of gold assets will hit the jewellery trade and encourage dependence on illegal sources. The policymakers should learn from the experience of clamping down on gold imports during the licence raj, leading to the emergence of powerful smuggling rings that endangered the country's security besides leading to a burgeoning black market in gold.

Government hikes import duty on gold to 8%. The government on Wednesday raised the import duty on gold to 8% from 6% in a bid to rein in import of the yellow metal and to help curb a yawning current account deficit. The basic custom duty on gold and platinum has been raised to 8% from 6% and changes come into effect immediately.

Weaker equities may increase demand for Gold

Spot gold prices increased by 0.9 percent in the yesterday's trading session as the rise in risk aversion in the global market sentiments increased the demand for precious metal as protection of wealth. Further, weakness in DX along with rise in Physical demand supported prices to trade positive. However, expectation among the investors that the US Federal Reserve may start trimming bond buying programme soon caped sharp upside in the prices.

The yellow metal touched an intra-day high of USD 1394.66/oz and closed at USD 1392.45/oz in yesterday's trading session.

In the Indian markets, prices ended on positive note in the yesterday trading session taking cues from spot gold prices and closed at Rs.26630/10gms after touching an intra day high of Rs. 26659/10 gms on Wednesday. Depreciation in the Indian rupee supported prices to trade in green.

MCX Goldm July contract trades flat.

Goldm prices on MCX were trading flat. At 16:03 hrs MCX GOLDM June contract was trading at Rs 26434 down Rs 40, or 0.15 percent. The GOLDM rate touched an intraday high of Rs 26532 and an intraday low of Rs 26430. So far 12457 contracts have been traded. GOLDM prices have moved down Rs 3707, or 12.30 percent in the June series so far.

At 16:03 hrs MCX GOLDM July contract was trading at Rs 26467 down Rs 24, or 0.09 percent. The GOLDM rate touched an intraday high of Rs 26545 and an intraday low of Rs 26450. So far 2063 contracts have been traded. GOLDM prices have moved down Rs 3533, or 11.78 percent in the July series so far.

At 16:03 hrs MCX GOLDM August contract was trading at Rs 26556 down Rs 36, or 0.14 percent. The GOLDM rate touched an intraday high of Rs 26628 and an intraday low of Rs 26542. So far 517 contracts have been traded. GOLDM prices have moved down Rs 794, or 2.90 percent in the August series so far.

Gold edges higher on global cues; demand subdued

Indian gold futures edged higher on Monday tracking gains in the overseas market, while demand in local spot markets remained subdued as prices were hovering above 26,000 rupees per 10 grams.

The actively traded gold for June delivery on the Multi Commodity Exchange (MCX) was 0.07 percent higher at 26,424 rupees per 10 grams.

Jewellers are not active. Retail demand is weak. The wedding season is coming to an end. There is no major festival in the next two months," said a Mumbai-based dealer with a private bullion importing bank.

"Gold supplies are comfortable in the local market. There is no shortage like we saw earlier this month, but buyers are not comfortable with making purchases above 26,000 rupees," the dealer said.

The Reserve Bank of India restricted banks from consignment imports of gold, except for jewellery exporters, after imports jumped more than 150 percent in April, despite a 50 percent hike in import duty in January.

The rupee, which is trading near its lowest level in more than eight months, plays an important role in determining the landed cost of the dollar-quoted yellow metal.

Indian rupee down 10 paise against dollar in early trade.

Dealers attributed the rupee's fall to dollar gains against other currencies overseas but a higher opening of the domestic equity market, capped rupee's losses to some extent.

The rupee today weakened further by 10 paise to 55.69 against the dollar in early trade on the Interbank Foreign Exchange due to appreciation of the US currency overseas.

Dealers attributed the rupee's fall to dollar gains against other currencies overseas but a higher opening of the domestic equity market, capped rupee's losses to some extent.

The rupee had lost 13 paise to close at a fresh six-month low of 55.59 against the dollar after dropping to eight-month low of 56.01 intra-day in yesterday's trade. Meanwhile, the BSE benchmark Sensex was up by 139.39 points, or 0.71 percent, at 19,813.72 in early trade today.

Gold jewellers face shortage of stocks, premiums still high.

Jewellers in India faced shortage of the yellow metal ahead of the key wedding season, keeping premiums supported at higher levels, despite meeting part of the demand through left over consignment stocks from banks.

On May 13, the Reserve Bank of India restricted gold imports by banks on a consignment basis, except to meet genuine demand from jewellery exporters.

“We have some left over consignment stocks … So for the time being we are catering to jewellers,” said an official with a foreign bank importing bullion.

The actively traded gold contract for June delivery on the Multi Commodity Exchange (MCX) was 1.28 percent lower at 25,505 rupees per 10 grams at 2.34 p.m., after hitting a low of 25,373 rupees, a level last seen on April 18.

“People have already purchased for Akshaya Tritiya and Gurupushyamrut (an auspicious occasion), and we don’t have ready material. Even if it is ready stock, we need to pay additional premium of 700-1,500 rupees (per 10 grams),” said Haresh Soni, chairman of All India Gems & Jewellery Trade Federation, a trade body.

India, the world’s biggest buyer of the metal, celebrated the second biggest gold buying festival after Dhanteras last week, and weddings will continue till June.

Gold slightly lower amid consolidation

Precious metals edge a touch lower, with ranges narrowing and prices consolidating after an erratic session Monday, which initially saw prices slump toward April lows, before dramatically reversing. The latter move,  was helped by a weaker U.S. dollar, which serves to lift the appeal of the dollar-denominated precious metals to buyers with other currencies. "All eyes will be on the release of the Federal Reserve policy meeting minutes Wednesday for further clues to plans on quantitative easing," Numis notes. A curtailing of QE would likely dent gold as a hedge against liquidity-fueled inflation and currency weakness, it adds. Spot gold is down 0.2% at $1,390.35/oz.