WEEKLY Round UP. Research Team. Marketing Team: Foretell Business Solutions Pvt. Ltd.

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1 WEEKLY Round UP Research Team G Srivastava President gsv@fbspl.com Debajit Saha Research Head debajit@bullionbulletin.in Bijayalaxmee Pradhan support@bullionbulletin.in Marketing Team: Vinayak Meherwade Vice President vinayak@fbspl.com Abhinaya Sr. Manager- Marketing info@bullionbulletin.in Foretell Business Solutions Pvt. Ltd. #146, Ramaiah Street, 1st & 2nd Floor, Gopal Towers, Near Anjenaya Tech Park, Old Airport Road, Kodihalli, Bangalore , Tel: / 53 The Prime Minister s (India) Economic Advisory Council has said last week that current account deficit may not be financed with foreign inflows as projected by Finance Minister P. Chidambaram. The Council is of the opinion that the government may have to dig into forex reserve to finance the CAD. But, at the same time, the Council has targeted the CAD to $70 billion or 3.8% of GDP, i.e. at par with the projection of Finance Ministry. The Council has also cut down the growth forecast of the current fiscal to 5.3% against earlier projection of 6.4%. Good news that agricultural growth is expected to increase to 4.8% in against dismal 1.9 percent last fiscal. On the much debated gold imports, the Council has projected clearly that gold imports would come down to $38 billion against $53 billion last fiscal. So, the recent measures taken by RBI are sufficed to indicate that restrictions on gold imports will continue to prevail. The government will continue to keep the higher import duty and 80:20 scheme along with other measures to restrict the import within $40 billion. Supply may remain the key issue for coming months as festival season has already started and usually demand remains extremely strong till December. As gold import has declined last two months, silver imports have risen to 3000 tons from the beginning of the current fiscal against 1900 tons during the same time last year. Jewellery are moving towards light weight jewelley and pushing more of diamond and other jewellers in domestic market so that they have to depend less on gold. But depending less on gold does not mean that jewelers do not want gold at all. Indian marriage and religious festivals are the largest demand centres for yellow metal as gold stands for God s metal in the country. For example, at current high price, people must buy at least little bit of gold if there is marriage at home. There are reports quoted in various newspapers that smuggled gold is available at cheaper rate in the market. But, that does not suit the purpose of jewelers who want to keep their books clean and so depend on official imports. As per market estimate, there is need of 40 odd tons of gold per month to meet the domestic demand. (India consumes around on an average tons of gold including scrap in a year. Keeping into consideration that scrap supply is around 100 tons in year, the country needs then tons for domestic consumption, which translates into 40 tons a month) The new RBI Governor has started his inning with big bang by taking series of measures to bring dollar into system. Most importantly, the Governor has opened up window to banks to raise capital from overseas based on their Tier-I capital. It has also opened up gate to swap this borrowed money against US dollar from RBI at 100 basis point cheaper rate for the maximum tenure of 3 years. Rupee has strengthened against US dollar since 5 th of September by 10%. IIP has also grown by 2.6% last month. Market is waiting for RBI s policy review scheduled on 20 th of September. But, best thing that has happened that rupee has appreciated by 10 percent since Mr. Rajan has taken the mantle of RBI Governorship. International Monetary Fund has projected US economy to grow at 3 percent in U.S. Labor Department has declared impressive drop in weekly unemployment rate. But at the same time, consumer sentiment has dropped to lowest level in September since April this year. So, economy still needs time to settle. Gold is expected to remain volatile for some more time as investors are not sure about the time when Fed will start winding up its QE program. ly Roundup

2 Price Analysis:- MCX Gold Oct 13 contract closed the week (Saturday) at Rs /10grams in India. Amid a better rupee condition and easing of international price, gold in India has been showing downward trend from past 15 days. On week on week basis gold price has come down by 5.51% from the preceding week. Technically, RSI and Stochastic are also showing bearish trend. Price may further come down to Rs range in the coming week. Turkey s current account deficit has widened to $5.8 billion in July, central bank figure showed. According to Ministry of Economy, large import of gold has contributed this increase. In the first seven months of 2012, the import was $5.6 billion which rose to $11.1 billion in first seven months this year. After India, it is the second country who claimed high import of gold behind the rise in country s current account gap. Following the trend in gold, silver s downward trend continued this week a well. MCX Silver December contract has closed the week at Rs /1kg, losing 7.83% from the previous week. RSI at is showing bearish trend will continue further. Price may further come down to Rs mark by next week. Gold Market Price as of 13 th September 2013: High (Rs.) Low (Rs.) Days SMA 50 Days SMA RSI 14 Stochastics Silver Market Price as of 13 th September 2013: High (Rs.) Low (Rs.) Days MA 50 Days MA RSI 14 Stochastics ly Roundup 2

3 News of the :- Investors cash in on soaring gold price, cash out of ETFs in August: Emirates Gold DMCC became the first refinery in Dubai who passed successfully its responsible Gold Guidance Audit. The independent third-party audit, conducted by Ernst & Young, concluded that Emirates Gold has complied with each of the five steps of the Dubai Multi Commodities Center s (DMCC) Practical Guidance for Market Participants in the Gold and Precious Metals Industry for the period from 1st June 2012 to 31st December Gold Exchange Traded Funds (ETFs) saw massive profit-booking last month as investors sold funds to take advantage of soaring gold prices which topped Rs. 33,000 in August, following the slide in the local currency coupled with the rise in import duty on gold and fears of a military strike on Syria by the US. Gold imports plunge to $650 m in Aug: Indian gold imports have fallen sharply to $650 million in August on account of a slew of steps taken by government to curb inbound shipments of the precious metal, a development that will help narrow the record current account deficit. Gold price to lose more gloss in 2014 GFMS: Gold prices are likely to contract further in 2014, after tumbling for the first time in more than a decade this year with the case for bullion undone by confidence in a stabilising global economy, a metals consultancy said on Thursday. In an update to its Gold Survey 2013, Thomson Reuters GFMS said the market could beat a retreat below $1,300 towards the end of 2014 as U.S. monetary stimulus is withdrawn, fuelling talk of rising interest rates. HSBC lifts 2013 gold price forecast on higher physical demand: HSBC Global Research raised its 2013 gold price forecast and said physical demand is becoming a major driver for the yellow metal. The bank lifted its gold price outlook for this year to $1,446 per ounce from $1,396, and kept its 2014 forecast unchanged at $1,435 an ounce. Jumping Chinese gold imports on pace to 1,000 tons: Even as the Indian government is seeking to restrict gold imports and is coming down hard on gold loan companies across the country, China could well be on its way to import 1,000 tons of gold for the whole year if recent buying trends continue. China has imported through Hong Kong 129 tons of physical gold in July, from the 113 tons it imported in June, according to the Hong Kong Census and Statistics Department. Govt. cuts base import price for gold, silver: In the wake of falling global prices of precious metals, the Government has further slashed the import tariff value of gold and silver to $432 per 10 grams and $736 per kg, respectively. Tariff value is the base price at which the customs duty is determined to prevent under-invoicing. ly Roundup 3

4 Data (US) Actual Value Forecast Value Date of Release 12 th Sept 13 Unemployment Claims 292k 332k 13 th Sept 13 Core Retail Sales m/m 0.1% 0.3% 13 th Sept 13 PPI m/m 0.3% 0.2% 13 th Sept 13 Retail Sales m/m 0.2% 0.5% 13 th Sept 13 Prelim UoM Consumer Sentiment Gold Spot Market, India Spot Gold 2013 High 2013 Low 1 month 3 Months Delhi Mumbai Bangalore Chennai Kolkata Hyderabad Ahmedabad Unit: INR/10gm Silver Spot Market, India Spot Silver 2013 High 2013 Low 1 month 3 Months Mumbai Unit: INR/kg Equities ly Closing Rate Percent Change Sensex DJIA FTSE Nikkei S&P Shanghai Exchange DAX Hangseng COT Report: Gold (Sep 09 Sep ):- Non Commercial Commercial Total Non Reportable Positions Long Short Spreads Long Short Long Short Long Short 180,877 53, , , , , ,711 49,087 34,768 (CONTRACTS OF 100 TROY OUNCES) OPEN INTEREST: 739,479 ly Roundup 4

5 COT Report: Silver (Sep 09 Sep ):- Non Commercial Commercial Total Non Reportable Positions Long Short Spreads Long Short Long Short Long Short 38,341 13,511 44,817 72, , , ,852 22,108 12,992 (CONTRACTS OF 5,000 TROY OUNCES) OPEN INTEREST: 177,845 London Gold Fixing (Sep 09 Sep ) USD GBP EUR AM PM London Silver Fixing (Sep 09 Sep ) CENTS PENCE EUR-CTS AM Disclaimer: The mentioned ideologies in this report are based on the research done at Foretell Business Solutions Private Limited (Formerly Foretell Capital Trust Private Limited), Bangalore. Foretell will not be responsible for any kind of losses incurred by any party either directly or indirectly based on our research results, though we have presented the best of our knowledge ly Roundup 5

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