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.

Remain bearish on gold & silver....

Be Bearish on Gold for this entire year probably much lower targets from here. But last time also before Akshaya Tritiya basically once the fall came in, in the first fall typically investors or buyers tend to buy because there is a lot of accumulated money, which has been there waiting on the sidelines for a dip to buy. So most of this buying has been jacked up into a couple of weeks at that point of time.

After the consolidation, now we are seeing the second round of selling coming up. Normally people do not come back to the markets because the sentiments are now dampening in the domestic markets as well. I think now people will wait because most of these accumulated buying has already done.

So, at this point of time, I still believe that probably we will have very lackluster buying at this point of time in the physical markets. Also the RBI controls will discourage physical buying from the jewelers at least from the bankers. That also would be suppressed. I would remain bearish on gold for at least next three-four months.

Hedge funds sell gold after propping mkt a month ago

Hedge funds and other big speculators in commodities have started selling gold in a big way, trade data showed on Friday, just a month after they had supported the precious metal amid a record tumble in its price

Just a month ago, CFTC data showed hedge funds had added to their net long positions in US gold futures despite a record loss in bullion prices at that time due to a broad commodities sell-off triggered by global economic worries.

On Friday, gold fell for a seventh straight session, its longest losing streak in four years, as the dollar rose to the highest since 2008 after some Federal Reserve officials said the central bank should end its stimulus for the U.S. economy.

Ultra low interest rates and hundreds of billions of dollars of Fed stimulus money have fueled higher prices for gold and other commodities over the past 3 years.

This year, gold's safe-haven lure been dulled by improving US economic data, which included a May reading for consumer sentiment that stood at a near six-year high. Money has also been rotating out of gold into equity markets as U.S. stock prices hit record highs.

MCX Gold June contract trades flat

Gold prices on MCX were trading flat. At 11:26 hrs MCX GOLD June contract was trading at Rs 26127 down Rs 4, or 0.02 percent. The GOLD rate touched an intraday high of Rs 26138 and an intraday low of Rs 25997. So far 5940 contracts have been traded. GOLD prices have moved down Rs 6067, or 18.85 percent in the June series so far.

MCX GOLD August contract was trading at Rs 26232 up Rs 20, or 0.08 percent. The GOLD rate touched an intraday high of Rs 26232 and an intraday low of Rs 26104. So far 407 contracts have been traded. GOLD prices have moved down Rs 5995, or 18.60 percent in the August series so far.

MCX GOLD October contract was trading at Rs 26294 down Rs 18, or 0.07 percent. The GOLD rate touched an intraday high of Rs 26310 and an intraday low of Rs 26245. So far 12 contracts have been traded. GOLD prices have moved down Rs 5556, or 17.44 percent in the October series so far.

Cure Yellow fever with good finance products...

There is an urgent need to contain gold imports to keep current account deficit within prudent limits. The recent surge in gold demand is however creating some distortions and needs to be rolled back to boost growth by reversing the trend of declining financial savings and keeping CAD within prudent limit by contain gold demand. 

As a first step, India the world's largest consumer of gold, needs to bring down demand from the current level of 1000 tonne per year to 700 tonne, taming inflation and enhancing the real rate of return on financial products are best way to contain gold demand, that government must ensure financial products from bank deposits to mutual funds give adequate returns so that investors shift to these products from gold.