Gold - Commentary On 19 Sept 2010

Gold reached an all-time high of $1274.95 per troy ounce this week as heightened economic uncertainty and quantitative easing speculation encouraged investors to increase their exposure to the precious metal. The US dollar has seen broad declines over the past week and could depreciate further if the Fed announces another round of quantitative easing. The Federal Reserve will meet on 21 September to discuss its policies and a pro–quantitative-easing tone may provide the impetus for further gains in gold. Goldman Sachs chief US economist Jan Hatzius earlier this week reported that further quantitative easing could be initiated as early as November. After the Japanese government intervened to weaken the yen on Wednesday, Japanese investors may seek shelter in gold on fears that further intervention may be on the cards. Gold has also traditionally been thought to be a good hedge against inflation, and with inflation in the UK not budging at 3%, there could be an influx of UK investors buying more bullion. The bullish sentiment was echoed by precious metals researcher GFMS, which hasn't ruled out the possibility of gold rising to $1350 this year as investment demand outstrips jewellery use. Notwithstanding this, demand for gold from the jewellery market is also expected to remain strong leading into the end of the year as gift-giving ahead of various religious festivities props up buying. This week also saw the last major gold miner close out its gold hedging positions. AngloGold Ashanti announced on Tuesday that it plans to raise around $1.5 billion to close out its hedging contracts, which were a major burden for the company as it locked in the price it received for gold at around $450 an ounce. This latest move will allow AngloGold Ashanti to benefit from future price increases in gold. This may be interpreted as a bullish signal as it suggests the miner is confident gold prices will rise further. On the other hand, it could also be considered a bearish move if you take the view that the company is closing out its previous hedge contracts in order to re-hedge at today's prices due to a belief that gold prices have peaked and will decline in the future. However, this seems unlikely as the fundamentals driving gold prices remain firmly intact.

Commodity Options Soonnnnn!

India's cabinet on Thursday approved amendments in forward contracts regulation, allowing exchanges to launch options in the commodity market, the government said in a statement.

The cabinet cleared the way to allow commodities exchanges to launch options on Thursday, a move which should boost liquidity in markets which have already attracted international investors.

"New products like options will be allowed in the commodity market," a statement issued by the government said after cabinet approved amendments to a regulatory bill. "This will benefit various stakeholders including the farmers."

The bill now goes to parliament for approval, the statement said. The Forward Markets Commission would be the regulator for the exchanges and will have autonomy, the statement said.

International investors Goldman Sachs and Intercontinental Exchange have already bought small stakes in Indian exchanges.

India's commodity market regulator, B.C. Khatua, told Reuters he expected to see institutional financial players in the futures markets after the changes.

Last month, the market regulator said India's Reliance Anil Dhirubhai Ambani Group planned to buy a stake in the Indian Commodity Exchange, a leading bourse for trade in metals including gold, while Jaypee Capital wanted to acquire 26 percent in the National Commodity and Derivatives Exchange.

Great News for Indian Commodity Traders as it paves way for hedging & better strategic trading.


Best Wishes :-)


Jai Jinendra

Silver Rising As Expected

As mentioned earlier... Silver has reached to Target one..


Expect some profit booking here... 

http://predictingfortunes.blogspot.com/2010/09/silver-spot.html

Silver Spot

As per our previous recommendation dated 8^th September, 2010 of going Long on Silver Spot, first target of $ 20.50 has been achieved.

Hence, in our view, profits on long positions (as per our previous recommendation) should be booked at the current levels and fresh long positions should be initiated on dips. Further, if prices continue to hold at the levels of $ 20.50/60 we could see an extended rally till $ 21 – 21.23.

Strong support is at $ 19.81 (Previous top) as seen on the chart above if this support is breach then price could test the next support at $19.40.

Strategy -- Go long targeting $ 21-21.23, with the stop loss closing below $ 19.80