By: Chintan Karnani, Insignia Consultants
-- Posted Monday, 3 December 2012 | | Source: GoldSeek.com
General market conditions
The
fall in gold and silver last week was due to profit taking and a
technical break down after repeated failed attempts to break past $1756
for gold and $3580 for silver. It’s not all over for gold and silver. Over
the past two years gold has recovered very quickly after $20-$30 falls
and the bear trend has not lasted for more than a week.
One
thing which I have observed over the past few years is that gold prices
have fallen whenever the Indian media, particularly TV channels, have
gone gaga over a gold price rise. The gold price fall all may be
temporary (after hyper bullish comments on gold by Indian TV channels)
but they have fallen. (Please note that that I have no intention to
criticize the Indian TV channels but I am just informing about reality).
When the gold price falls all the stop losses get triggered and the
short term trader gets his profits wiped out and the retail traders say
curse the markets or their luck. For the traders in MCX and other
commodity exchanges who have incurred losses all I can say that it is
your money, trading profits are yours and losses are also yours. The
media, consultants (in including us), etc. are not your partner in
losses or profits. One needs to trade carefully and ensure that over a
period of time one gets decent returns. It is your hard earned. Getting a
trading loss is very easy but getting back into profit after a trading
loss is not easy.
Traders
will prefer to go long in gold and silver before the US November non
farm payrolls on Friday. A significantly bad number can restart the big
gold bull run. We need to be careful while trading as intraday
volatility will rise. Jewelry demand will rise in India due to the price
fall. Indian people will use the current fall and further fall (if any)
in gold prices to invest in gold. The Hindu marriage season has begun
which will also add to gold demand.
India gold imports
Gold imports in
value terms declined by 30.3 per cent in the April-September period of
this year to $20.2 billion. During the April-September period of 2011, Gold imports had increased by 66 per cent to $29 billion
November sales of U.S. American Eagle gold coins
are set to be the strongest in 14 years. Investors have so far this
month bought 131,000 ounces of American Eagles produced by the U.S.
Mint, more than triple last year's November sales and marked the
strongest November since 1998, data from the Mint's website
shows. Gold’s bull run is here to stay.
2013 MCX GOLD FORECAST
In
2013 intraday volatility will be very high. The direction of the Indian
rupee against the US dollar will be key just like in 2012. We expect
wide trading range of Rs.28000-Rs.38000 for 2013. The chances of
Rs.38000 are higher as long as gold trades Rs.28000. The reserve bank of
India and the UPA government is looking for ways and means to curb the
so called menace (for the Indian government) of gold imports in India.
One needs to look for further tax increases in gold imports in 2013. Yes
we do expect further increase in taxes in gold imports in 2013. Any new
instruments of investment to lure away gold investors to something else
will be useless and unsuccessful as most of the gold investors are
traditional type investors.
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