Following gold’s footsteps, silver too marked an all-time high on the domestic front, amidst a sharp rally in industrial metals…reports Asian Lite News
From the beginning of 2024, gold has been on a strong footing having risen by 6 per cent as against the broader equity market says Naveen KR, smallcase Manager & Senior Director, Windmill Capital.
The slew of elections lined up in this fiscal year bodes well for gold. The reason is that during times of uncertainties, investors tend to park their money in safer asset classes, he said.
“As a lot of countries go into elections this year, gold would likely remain in the spotlight. Not to mention, the strong institutional buying that gold has witnessed over the past few years which in turn provides a solid support to this asset class,” he said.
Navneet Damani, Senior VP, Commodity Research at Motilal Oswal Financial Services said gold continues to hover around its all-time high levels, on the back of weakness in the Dollar amid uncertainty over U.S. interest rate cuts, while increased safe-haven demand also aided prices.
Following gold’s footsteps, silver too marked an all-time high on the domestic front, amidst a sharp rally in industrial metals.
Persistent geopolitical tensions in the Middle East and between Russia and Ukraine, coupled with a devastating earthquake in Taiwan, spurred safe haven plays into bullion and other precious metals, he said.
Fed Governor and officials’ comments remain mixed regarding the pace of interest rate cuts in this year. Governor Powell in his comments mentioned that the interest rates have peaked for this cycle, however, they will still watch the economic numbers and inflation trend before taking any decision.
Governor Powell believes that the monetary policy is tight. Economic data points from the US are also reported a bit mixed, but no major impact is being seen on the metal prices, he said.
Spot gold hit $2,304.09 per ounce, remaining steady at $2,299.28 per ounce as of 0343 GMT. Meanwhile, spot silver fell to $27.08 per ounce, platinum edged down to $935.39, and palladium rose to $1,017.83…. reports Asian Lite News
Gold prices surged to an all-time high on Thursday following Federal Reserve officials’ reaffirmation of anticipated interest rate reductions in 2024, as reported by Reuters.
Spot gold was steady at $2,299.28 per ounce as of 0343 GMT and hit a record high of $2,304.09 earlier in the session. Bullion has hit record highs in each session since last week’s Thursday.
Spot silver fell 0.5% to $27.08 per ounce, platinum edged down 0.1% to $935.39 and palladium was up 0.4% at $1.017.83.
Alok Kumar Choudhary noted that despite the absence of the gold standard, numerous banks, including the RBI, persist in maintaining gold reserves as an essential element of their overall holdings…reports Asian Lite News
India as the second-largest buyer of gold in the world can play a crucial role in the global economic order as central banks are still buying the precious metal in large quantities, Alok Kumar Choudhary, Managing Director, State Bank of India (SBI), said on Friday.
“We have also seen how India can be the fulcrum in setting up global economic corridor,” he said while addressing the 15th International Gold Economic Forum organised here by ASSOCHAM.
While the gold standard might not be in place anymore, several banks including the RBI continue to hold gold reserves as a staple component of their overall reserves, he added.
“In an interconnected world, economic ties transcend borders and gold’s role as common accepted asset can foster a sense of stability and potentially contribute to a more integrated, co-operative global economic system. Banks as critical stakeholders in the financial ecosystem play an important role in formalising gold to ensure the integrity of the financial system,” Choudhary said.
Addressing the gathering, Dr. C. Rangarajan, former Chairman of the Economic Advisory Council to the Prime Minister and former RBI Governor, said: “Gold has been a tangible asset since ancient times, in all cultures and across all periods of history. While held as reserve by central banks, it no longer plays the role of intermediary in circulation. As the second largest consumer of gold, India accounts for one-fourth of the global demand. India’s import of gold was 394 tons in 2000 and 774 tons in 2022 or $135 million. In 2022-23, gold imports accounted for 52.2 per cent of the current account deficit. The current level of import duty on gold is reasonable and is among the lowest among commodities.”
Somasundaram P.R., Regional CEO – India, World Gold Council, said: “Gold is a very good diversifier, it de-risks your portfolio and enables you to take more risk in other financial asset classes. India, as a gold consumer, can also be proud to have HUID technology through which every piece of jewellery hallmarked can be traced to its origins, which is aspirational in other markets.”
Suvanker Sen, Co-Chairman, National Council on Commodity Markets – ASSOCHAM, said: “Consumer behaviour over the years in India has proven that we trust in gold. The various initiatives undertaken by all stakeholders has achieved a lot but a lot more can be done. The growth of the country is closely linked with the rise of gold as an asset. The 25,000 tons of gold that is embedded in our economy is one major driver.”
S.C. Aggarwal, Senior Member, Managing Committee – ASSOCHAM, said: “Gold has multiple usage, as an ornament, it is a status symbol and an investment as well. India needs around 800 tons of gold every year necessitating imports which increases our trade deficit.”
According to market analysts this has spurred the demand for gold as a safe-haven investment….reports Asian Lite News
Gold prices in India have shot up by as much as Rs 4,150 per 10 grams during October to touch the Rs 60,825 mark on Friday from Rs 56,675 on October 3, according to figures compiled by the Indian Bullion and Jewellers Association.
The sharp increase in the price of the yellow metal comes ahead of the auspicious Dhanteras occasion for buying gold on November 10, as well as the approaching festive and wedding season when the demand for jewellery shoots up.
In the international market, too, gold prices have surged above $2,000 an ounce during the week, making it the third consecutive weekly gain, as geopolitical tensions rise amid the Israel-Hamas war.
According to market analysts this has spurred the demand for gold as a safe-haven investment.
Kama Jewelry MD Colin Shah expects the demand for gold to remain buoyant due to the strong “sentimental value” attached towards buying gold during the festive season and the Indian culture of gifting jewellery during weddings.
The recent volatility in the stock markets has also prompted investors to look at a safer bet and gold appears to be the ideal asset. Besides, the gold also provides a hedge against the strengthening dollar as the rupee has been weakening, said a senior bank official.
As the Israel-Hamas war threatens to escalate into a wider geopolitical conflict involving the US and Iran, spot gold price hit $2,000 levels on Friday and closed at 2,006 per ounce levels.
Gold future contract on Multi Commodity Exchange (MCX) for December 2023 expiry surged Rs 308 per gm and ended at Rs 61,260 levels on Friday.
This exhibition is a wonderful opportunity for us to showcase our superior craftsmanship and exclusive exquisite designs to Kuwait’s fashion-forward audience and understand what makes them tick…reports Asian Lite News
India’s largest and most trusted jewellery brand continues its exploration journey across the GCC region. Tanishq will be showcasing an exquisite range of gold and diamond jewellery including the brand’s most popular collections – Alekhya, Rifa, Aarambh and Colour Me Joy at Gold and Jewellery Kuwait City taking place from 24-29 May at Kuwait International Fairs Ground.
Firmly established as an important platform for designers, global jewellery retailers, wholesalers, and suppliers, the highly regarded annual event is renowned for attracting industry stalwarts, showcasing new trends and networking. The visitor profile is equally diverse and includes jewellery collectors, discerning consumers, media representatives, and regional fashion influencers adding to the allure for a brand like Tanishq as it continues its robust expansion in the region.
“Whether its traditional or contemporary, gold or diamonds, part of a collection or custom-designed, the discerning buyer in the region expects nothing less than the best quality, craftsmanship and attention to detail when purchasing a piece of jewellery,” said Aditya Singh, Head of Jewellery Division, Tanishq International Business.
“Participating in an event of this calibre is a great brand extension for us and leverages the reputation, popularity, and brand loyalty we are proud to have enjoyed since we entered the region in 2020. This exhibition is a wonderful opportunity for us to showcase our superior craftsmanship and exclusive exquisite designs to Kuwait’s fashion-forward audience and understand what makes them tick,” he added.
You will find Tanishq in Hall 4, Booth 175 at Gold and Jewellery Kuwait City taking place from Wednesday, 24 May to Monday, 29 May 2023 at Kuwait International Fairs Ground.
Gold prices hitting a fresh high is a sign of slower economic growth and lower interest rates with ample liquidity to help the system steer of the current situation..reports Asian Lite News
Gold has turned into a more bankable asset and its prices going up as several American banks are going down, say experts.
On Monday, the yellow metal shone brighter at the markets with gold at the MCX crossing the Rs 60,000 mark.
“Gold prices have risen almost 7-8 per cent in the past month. The rally in the yellow metal is primarily due to the banking crisis in the west. The liquidity infused by the central banks and the expectations of lower to no rate hikes is pushing gold prices up. Gold is a safe haven, historically it has gained in periods of uncertainty,” Colin Shah, MD, Kama Jewelry, said.
Gold prices hitting a fresh high is a sign of slower economic growth and lower interest rates with ample liquidity to help the system steer of the current situation.
According to Shah, the current situation globally may take some time to clear out. Globally, central banks have been adding gold reserves.
“We expect gold to gain further and touch new highs in the next few months. Domestically, it is expected to trade in the range of Rs 61,000-62,000/10gm. Internationally, it may scale levels of $2,050-2100/oz,” he added.
Navneet Damani, Senior VP, Commodity Research at Motilal Oswal Financial Services, said: “Bullions continue surge, with gold on domestic front hitting a new life time high of over Rs 60,000, as a wave of banking crises shook global markets and put bullion on track for its biggest weekly rise in three years, while bets solidified for a less aggressive Fed in its fight against inflation.
“The collapse of Silicon Valley Bank in the US has highlighted banks’ vulnerabilities to sharply higher rates, while a rout in Credit Suisse shares has added to the market turmoil. On other hand, after ECB announced a 50bps rate hike last week, all eyes are now on Fed’s policy meeting scheduled later this week.
“Fed is expected to raise rates by 25bps, however probability for a pause is increasing sharply supporting the move in safe haven assets. Over the weekend, there were quite a updates regarding the US banking concerns which slightly weighed on the safe haven assets. UBS agreed to buy 167-year-old Credit Suisse for $3.23 billion and assume up to $5.4 billion in losses in a deal backed by a massive Swiss guarantee and expected to close by the end of 2023. Meanwhile, major central banks including Fed, ECB, BOJ, BOE announced a co-ordinated central bank action to enhance liquidity via USD-Swap line. These updates are likely to keep the volatility high.”
“Broader trend on COMEX could be in the range of $1985- 2015 and on domestic front prices could hover in the range of Rs 59,800�60,600 could be expected,” Damani added.
The gold started the new year on a cheery note, up about six per cent in January in dollar terms and about four per cent in rupee terms….reports Asian Lite News
As in 2022, gold is expected to log double digit gains this year as per indications, said experts.
“The yellow metal has already posted over three per cent gains in the month of January, 2023. The current setup seems to indicate a re-run of 2022. Gold seems to be poised to open a new chapter in term of its price trajectory,” Emkay Global Financial Services said in a report.
According to Quantum Mutual Fund report, gold started the new year on a cheery note, up about six per cent in January in dollar terms and about four per cent in rupee terms.
Underpinning the rally was annual inflation in the US slowing for a sixth straight month to 6.5 per cent in December, raising hopes of smaller rate hikes from the Federal Reserve in Q1’23 and rate cuts later in the year, Quantum Mutual Fund said.
In the last one year, gold purchases in the international markets was about 4,000 tonne of which 1,400 tonne took place in the last quarter, said Emkay Global.
Apart from institutional buying, jewellery demand in China revived with the Covid restrictions being relaxed there. China is one of the biggest consumers of gold, accounting for over 30 per cent of global jewellery demand, Emkay Global said.
“The yellow metal benefitted from a softer USD environment and lower US Treasury yields. Physical demand from China during the Lunar New Year celebrations, central bank gold buying and increase in net long positioning in gold by global money managers also supported prices,a Quantum Mutual Fund said.
The general expectation that there will be a slowdown in economic activity in the major economies also is helping gold though the high inflation never propelled gold to higher levels, said Emkay Global.
In India, with a duty cut now out of the picture for the foreseeable future, down moves in gold on account of that are no longer expected. But prices could see some headwinds from developments on the US monetary policy front. Investors can stagger their purchases over the next few months to build their gold allocation, Quantum Mutual Fund said.
India is the second largest jewellery market in the world. The gold market forms a deeply intrinsic part of India. For the population of 1.4 billion, gold, and specifically gold jewellery, plays a central role, acting both as an adornment and a form of investment … writes Fathima Azeez
For decades India was the largest consumer of gold before being overtaken by China in 2009. In 2021 India bought 611t of gold jewellery, second only to China (673t) but comfortably ahead of all other gold-consuming markets, a recent World Gold Council report revealed.
Much of the Indian gold market is very traditional, reflecting important cultural and religious ties. This can be seen in the long-standing preference for 22-carat jewellery and the dominance of bridal jewellery. But the gold market is evolving, with changing tastes and designs driven by economic growth, globalisation and changing consumer preferences. In recent years, for example, demand has grown for lightweight and studded jewellery.
Mr Somasundaram, Regional – India, CEO, World Gold Council
Mr Somasundaram PR, Regional CEO, India, World Gold Council, said: “India is a strong pillar of support for the global gold markets as the second-largest consumer of gold jewellery. While weddings and festivals act as important drivers of jewellery demand, our rich cultural heritage and historic status as a major global force in world commerce underpin this strong socio-economic relationship with gold. Over time, we have created countless reasons and joyous occasions to accumulate gold. Bridal jewellery segment alone accounts for nearly half of the market share with rural India being the largest consumer of gold jewellery in the country.”
The gold jewellery exports in India have grown from USD7.6 billion in 2015 to USD12.4 billion in 2019. Bridal jewellery dominates the gold jewellery landscape, enjoying 50-55 per cent of market share in India. Plain gold jewellery maintains 80-85 per cent of market share, the majority of which is 22-carat although the market for 18-carat jewellery is growing. Daily wear jewellery accounts for 40-45 per cent of the market.
“Over the long term, gold jewellery demand in India will be driven by economic growth, income growth and wealth distribution, as well as the rate of urbanisation. Whether cultural connections will continue to remain strong with the millennials is to be seen. It is more likely though that the marketing and digital advances may change in-store experiences and inspire different buying impulses and moments beyond just the traditional reasons, the attraction to gold jewellery can be expected to remain strong. The government’s focus on strengthening jewellery manufacturing and exports will bring in a wave of innovation that should refresh the association with gold through higher quality and craftsmanship, enabling India to be the jeweller to the world.”
Plain gold jewellery exports accounted for 38 per cent of gold jewellery exports from India in 2021. Over the last decade nearly 90 per cent of India’s jewellery exports have flowed to just five major markets: namely, the UAE, the US, Hong Kong, Singapore and the UK.
South India dominates Indian gold jewellery consumption, accounting for 40 per cent of the country’s total jewellery demand. Aside from gold, India has a sizeable and vibrant silver jewellery market and is the world’s largest fabricator of silver jewellery. Our 2019 consumer survey, carried out by Hall & Partners, found that 60% of the women surveyed owned gold jewellery, closely followed by 57 per cent who owned silver jewellery, but only 26 per cent owned diamond jewellery. Platinum jewellery did not appear among the top purchases by female consumers, as this market is still in its infancy in India.
Secondly, the UAE’s implementation of a 5 per cent import duty in 2017 and 5 per cent Value Added Tax (VAT) in 2018 have negatively impacted its competitiveness….reports Asian Lite News
The US has become India’s largest export market for gold jewellery ahead of the UAE, the World Gold Council (WGC) said in a report.
According to WGC, the US became the largest market for Indian gold jewellery due to additional tariffs on Chinese jewellery to the US, which made the Indian exporters more competitive.
Secondly, the UAE’s implementation of a 5 per cent import duty in 2017 and 5 per cent Value Added Tax (VAT) in 2018 have negatively impacted its competitiveness.
The WGC said that under a Comprehensive Economic Partnership Agreement (CEPA), introduced in May 2022, 90 per cent of Indian goods sent to the UAE will be given duty-free access. As goods sold in the UAE are re-exported, this has substantially increased India’s gold jewellery exports and will continue to do so.
With the Indian government seeking to boost manufacturing and exports, jewellery exports are likely to rise. Also, proposals to allow advance payments to overseas precious metal suppliers and set up mega common facility centres (CFCs) in the Santacruz Electronics Export Processing Zones (SEEPZ) in Mumbai and Surat could stimulate sector growth if implemented, said WGC.
According to the gold mining companies’ lobby body, CFCs would encourage best practice while state-of-the-art machinery would give small manufacturers access to technology and resources. If these efforts are supported by marketing communications around both quality and craftsmanship, the future of India’s gold jewellery market will be assured.
Though India is the second largest market for gold in the world, the sector faced regulatory changes and shifting consumer behaviour, WGC said.
“Looking ahead, gold jewellery will face further challenges. Changing demographics and the possibility that millennials will move away from gold as other luxury items demand their attention cannot be ignored. Against these headwinds, gold jewellery demand will likely profit from strong economic growth and urbanisation, as incomes rise and the middle class increases. As more people are lifted out of poverty, gold jewellery demand will benefit,” WGC said.
There are few factors which triggered volatility in the market like, move in Dollar Index & yields, aggressive monetary policy stance from major central banks, rising inflationary concern, geo-political tension, which led to this volatility…reports Asian Lite News
A roller-coaster ride may have less ups and downs than what the gold market has in 2022 is what industry experts say looking back at the year that is set to end soon.
“A roller-coaster ride has less ups and downs than what the bullions market had in the year of 2022. Both the metals, gold and silver, kept the market participants on edge,” Navneet Damani, Sr. VP, Currency & Commodity, Motilal Oswal Financial Services, said.
According to Damani, the Comex Gold has made a high of about $1,935 and a low of about $1,630, while silver on other hand made a high of about $25 and low of about $18.
There are few factors which triggered volatility in the market like, move in Dollar Index & yields, aggressive monetary policy stance from major central banks, rising inflationary concern, geo-political tension, which led to this volatility.
Concurring with him are Chirag Mehta, CIO and Ghazal Jain, Fund Manager. Alternative Investments, Quantum AMC. who said in a report: “Gold prices approached an all-time high of around $2,070 in March on the back of risk aversion triggered by the Russia-Ukraine war. But later, as the geopolitical risk premium waned coupled with the US Federal Reserve’s tightening spree to combat sky-high inflation, prices faced heavy downside pressure.”
Pointing out the repo rate hikes by the Reserve Bank of India (RBI) and the US Federal Reserve, the two experts said the action resulted in the flight of money from risky assets to the US dollar as the real interest rates (indicated by US 10Y Treasury Inflation Protected Securities) turned positive for the first time in two years in May 2022.
“This led to a sell-off in gold taking prices down to a two-and-a-half-year low of $1,614. However, as inflation started to moderate sequentially in Q4 2022, investors started anticipating a less aggressive Fed in 2023, and the dollar came under pressure helping gold prices to scale back up,” the Quantum AMC report said.
“Stepping into 2023, we can’t be sure if this reaction is justified given that inflation in the US remains well above the Fed’s 2 per cent target, and the Fed has made it clear that while the pace of rate hikes could slow down from hereon, but the slower pace does not mean lower rates which the markets had started anticipating,” the Quantum AMC officials said.
According to the Quantum AMC report, there can be another 50-75 basis points hike in the first half of 2023 by the US Fed which in turn could result in bouts of volatility in both risk assets and gold as real rates rise in an environment of cooling inflation and higher nominal rates.
Damani said the gold’s domestic story is quite different, as even after such macro happenings there was not a great on the MCX, amidst factors like sharp depreciation in the rupee coupled with hike in basic customs duty by five per cent on gold.
He said 2022 has definitely given a boost in market participants confidence as to gold and silver.
Along with Russia-Ukraine tensions, inflationary concern and Covid scare in China, market participants will also carry the baggage regarding slower global growth into the next year, Damani said.
“Going ahead, market participants will keenly focus on the monetary policy stance from major central bankers. A move in Dollar Index and Yields will also be watched by the market. Gold/silver ratio has also fallen from the recent peak of about 97 to about 75, supporting the move in silver. And also apart from safe haven bets, advancement in green technology and increase in industrial demand could continue to support silver prices,” Damani remarked.
According to him, there seems some signs of exhaustion in gold and silver and dips could be used as buying opportunity for any medium to long term investor for the target of Rs 58,000 in gold and Rs 73,000 followed by 82,000 in silver.
