GOLD MONTHLY FUNDAMENTAL ANALYSIS

GOLD (Market Outlook and Fundamental Analysis :-Gold prices remained very much volatile on MCX in the starting of the month of Aug as 1st Aug to 5th of Aug was an expiry period for the gold prices but after that the momentum what was in the 2nd half of the last month July, started showing
its strength and the week closing on 11th Aug. gold price were Rs 30032/10gm around 1 percent above from closing of Rs. 29749/10gm month ended 31st July.
On the other side during the same period gold prices on
COMEX also rose and on 10th of Aug. closed $1622.8/oz. Net
increase of $8.2/oz compare to the month ended 31st July
closing $1614.6/oz. The factors that were supported this up
move were the followingcontinue
weak U.S. economic data release from last
two week were making fall in Dollar and investors
were choosing gold as an alternate of dollar, the time
when gold were very attractive.
Concern over U.S. economy were also increasing the
possibility of Quantitative Easing 3 from Fed in near
future that keep on supporting gold prices during this
period.
During the second week that started from 13th of Aug gold
market remain very volatile, and at the end of the week price
on MCX were little change with positive 132 and closing at
Rs. 30164 and on COMEX price were also little change with
negative $3.4 and closing at $1619.40.The reasons behind the
volatility were-
Gold prices had stuck in the range of $1600-$1626
over the hope of monetary stimulus from U.S. Fed
while U.S. economic data was very mix to judge the
U.S. economy.
During the period there was news that ECB will start
buying sovereign bonds to lower borrowing costs in
debt-stricken countries such as Spain and Italy. The
process would support Euro as well as gold prices.
Third week of the month Aug. that started from 20th and close
on 25th created history on MCX, gold price entered their life
time high that was Rs. 30955 and closed at 30947. The upside
movement that started in gold prices didn’t stop till the end of
the month and on 31st of Aug prices were hovering at their life
time high Rs. 31231 and settled at Rs 31206, The Aug. month
ended with complete 1457 positive point and in percent terms,
increase of 4.89 percent. COMEX gold also blasted during this
period and breached its five-month-high level and high made
$1695.5 before settling at $1687.6 on 31st of Aug; complete
positive $73 improvement and in percent terms 4.52 percent.
Very crucial evident factors that supported the gold move
were-
20th Aug. German magazine Der Spiegel reported
that ECB new crisis fighting plan could include
buying Euro zone countries bonds if their borrowing
cost breached certain levels that will strengthen Euro
against Dollar and god follows Euro.
22nd of Aug. Minutes were given of the meeting from
the U.S. Federal Reserve for another round of
monetary stimulus imminent.
31st of Aug. Fed Chairman Ben Bernanke speech that
didn’t give any clear clue regarding QE3, but the
main word he used the “grave concern” over the
labour market condition, and market sooner
interpreted that there is going to be more QE and
blasted in the gold form.
Now in the month of September some crucial events will
remain in focus are---
-European Central Bank meeting in the first week of the
month.
-Nonfarm payroll data release on 7th of Sep. from U.S. to
judge U.S. labour market situation as Bernanke had
shown grave concern over labour market in last meet.
-Fed next meets on 13th of Sep; investor will hope some
more hint over QE3. (NEAL BHAI)