Top Five Factors Which are Driving Down The Rupee Against The Dollar

The rupee plunged to a fresh 13-month low in trade on Wednesday as brewing financial crisis in Russia continued to raise concerns about foreign fund outflows.

The rupee made the day's low of 63.89 against the US dollar. In the last one month-and-a-half, the rupee has tended to decline against the US dollar, with the pace accelerating in the latter part of November and December.

It has been depreciating since the beginning of November 2014. CARE Ratings expects the domestic currency to hover between Rs 64 and Rs 65 a dollar in the coming days until there is intervention from the RBI and the global situation returns to normalcy.

Overall, the rupee has recorded a 2.9 per cent depreciation against the US currency. There may also be measures imposed on gold imports in case the available data suggests a continuation of the trend of increasing imports. 

According to experts, the near-term trend looks volatile and the currency may touch levels of 64/USD. HSBC forecasts 2015 to be a better year, while Deutche Bank and Barclays foresee a slide in the currency in the next year.

The sell-off in emerging market currencies seems somewhat indiscriminate right now. But what will happen over the next month or so is that the market will become more discriminatory as the sell-off will stabilise or reverse for a number of Asian currencies, say experts. 

"The situation in Asia is totally different from that we saw in 1998. Yes, the Indian rupee cannot really challenge the broad dollar strength. But I do think that the decline in the Indian rupee is going to be very minor. We have currently traded down to close to 63-64," says Robert Parker, Senior Advisor, Credit Suisse.

"Some further slippage in the first half of next year is inevitable. But I would emphasise that it is going to be a moderate move. It is going to be nowhere of the order or magnitude that we have seen previously," he adds.

Read more at: EconomicTimes

Gold Prices Jump by Rs 650 on Strong Seasonal Demand

Gold prices on Wednesday soared by Rs 650 to Rs 27,470 per ten gram in the bullion market in the national capital on strong seasonal demand and firm trends in overseas markets.

A fall in rupee value against the US dollar and increased buying by jewellers and retailers amid ongoing wedding season lifted prices of gold, bullion traders said.

A cheaper rupee makes gold imports costlier. The rupee was trading weak at 62.05 against the US dollar at the Interbank Foreign Exchange (Forex) market.

The precious metal's prices surged over US $28 to a six-week high of US $1,238.32 an ounce in New York on Tuesday as weakening of the Greenback and retreat in global stock markets raised demand for gold as an alternative investment.

On similar lines, silver prices also rose sharply by Rs 1,600 to Rs 38,400 per kg on increased off-take by industrial units and coin makers.

Silver prices climbed up by 5.2 per cent to US $17.12 an ounce in New York on Tuesday.
In the national capital, gold of 99.9 and 99.5 per cent purity zoomed up by Rs 650 each to Rs 27,470 and Rs 27,270 per ten grams respectively. It had gained Rs 170 on Tuesday.

Sovereign traded Rs 100 higher at Rs 23,800 per piece of eight gram.
Following gold, silver ready spurted by Rs 1,600 to Rs 38,400 per kg and weekly-based delivery by Rs 1,815 to Rs 38,615 per kg. Silver coins shot up by Rs 1,000 to Rs 63,000 for buying and Rs 64,000 for selling of 100 pieces.

Read more @  BusinessToday

Gold price lifted out of danger zone

On the Comex division of the New York Mercantile Exchange, gold futures for December delivery on Tuesday attempted a comeback of sorts, recovering from a two month low.

By the close of regular trade gold was changing hands for $1,285.20 an ounce, up over $6, after earlier hitting a day high of $1,291.90. The gains follow six weak sessions which saw the metal lose 2% in value.

Tuesday's move lifted the metal above its 200-day moving average – a bullish technical sign – after bouncing off support at $1,272 and could now attempt a move back above $1,300 an ounce.

The gains in the price of gold came amid fresh money flowing into US equities with the S&P 500 setting new records above the 2,000 point level on Tuesday.


During the last Fed tightening cycle the gold price actually increased by about 50%

Minutes of the last US Federal Reserve meeting showing the US central bank opting for a more hawkish tone as the country's job picture continues to improve sparked last week's sell-off on the gold market.

Short term bond yields have also been rising on expectations that the bank might raise rates a bit sooner than expected.

Bond yields are negatively correlated with the gold price as the metal is not income producing, but rising interest rates do not necessarily turn gold into a one-way bet.

During the last Fed tightening cycle from June 2004 to June 2006 the price of gold actually increased by about 50%.

And soaring equity markets and sky-high stock valuations may push investors back into gold. London-based ETF Securities, an institutional research firm, sees money flowing back into hard assets:

"Gold and silver have had substantial corrections offering attractive relative value propositions and remain near the cost of production. Fundamental value and relative valuations normally prevail in the long term as many prudent investors have continued to diversify into the precious metals."

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Gold Extends Losses to Third Day as Oil Slumps

Gold extended losses into a third session on Friday, dropping to a one-week low, on expectations that plunging oil prices could sap inflationary pressure, curbing the metal's appeal as a hedge. Oil hit four-year lows around USD 70 a barrel, as OPEC resisted the temptation to cut back production following a more than 30 percent plunge in prices since June. The drop in oil prices, along with the resulting strength in the dollar, hurt gold which is often seen as a hedge. 

"Precious metals declined as lower oil prices prompted concerns about deflation," said ANZ analyst Victor Thianpiriya. Spot gold had fallen 0.3 percent to USD 1,187.40 an ounce by 0741 GMT. It hit USD 1,181.30 earlier in the session - its lowest since Nov. 20. The metal has lost over 1 percent for the week, snapping a three-week rally. US gold futures slid 1 percent to a session low of USD 1,180.60. The dollar index held firm, having made notable gains versus oil-related currencies, the Canadian dollar and Norwegian crown in the previous session.

 "Gold sympathized with oil but I think there is a limit to the downward slide and we might hold USD 1,180 for now," said a trader in Tokyo, adding that the market was also eyeing the Swiss vote on central bank reserves on Sunday. The vote is aimed at preventing the Swiss National Bank from offloading its gold holdings and obliging it to hold at least 20 percent of its assets in gold, compared with 8 percent last month. 

The most-recent opinion poll showed support among Swiss voters for the initiative had slipped to 38 percent. A surprise 'yes' vote, however, could prompt the Swiss central bank to buy about 1,500 tonnes of gold over the next few years, boosting bullion prices, analysts say. "Most people in the market are already expecting a 'no' in the Swiss vote but it might still cause some sell-off. A 'yes' vote is unlikely but if it happens, we can see a jump in prices," the Tokyo-based trader said.

 Among other precious metals, silver futures slid 3 percent. Platinum is down 1 percent for the week on outflows from the metal-backed exchange-traded funds. Palladium was headed for a second weekly gain.

More information at @ MoneyControl

Gold Prices Recover on Wedding Season Demand

NEW DELHI: Gold prices recovered by Rs 20 to Rs 26,900 per ten grams at the bullion market in the national capital today on the back of wedding season demand from jewellers and retailers even as the metal weakened overseas.

Silver rose by Rs 100 to reclaim the Rs 37,000-mark on increased offtake by industrial units.

Traders said scattered demand from jewellers and retailers in view of wedding season helped gold prices to recover but a weak trend in global markets limited the gains.

Globally, gold declined by 0.40 per cent to USD 1,204.69 an ounce in Singapore.


In Delhi, gold of 99.9 and 99.5 per cent purity went up by Rs 20 each to Rs 26,900 and Rs 26,700 per ten grams, respectively, while sovereign held steady at Rs 23,700 per piece of eight grams.

Silver ready also moved up by Rs 100 to close at Rs 37,000 per kg and weekly-based delivery by Rs 580 to Rs 36,650 per kg on speculative buying.

Meanwhile, silver coins ruled steady at Rs 62,000 for buying and Rs 63,000 for selling of 100 pieces in restricted activity at existing higher levels.

Read more at:
EconmoicTimes

India's position in Corruption Perception Index improves

In a good news for India, the country has improved on its ranking in the Corruption Perception Index. In the data for the year 2014, India stands at 85th position out of 175 countries as compared to its ranking of 94 in 2013 out of 177 countries. There has been an improvement in the CPI score also for the year 2014. The score which is 38 in 2014, was 36 in the year 2013. Poorly equipped schools, counterfeit medicine and elections decided by money have been stated as some of the consequences of public sector corruption.

 "Bribes and backroom deals don't just steal resources from the most vulnerable - they undermine justice and economic development, and destroy public trust in government and leaders," the report states. Based on expert opinion from around the world, the Corruption Perceptions Index measures the perceived levels of public sector corruption worldwide. In an alarming picture painted by the CPI, not even a single country has got a perfect score and more than two-thirds score below 50, on a scale from 0 (highly corrupt) to 100 (very clean).
More on : MoneyControl

Gold Prices and the U.S. Economy

Gold prices are a good indicator of how healthy the U.S. economy is. When the price of gold is high, that's when the economy is not healthy. Why? Investors flock to gold when they are protecting their investments from either a crisis or inflation. When gold prices drop, that usually means the economy is healthy. That's because investors have left gold for other, more lucrative, investments like stocks, bonds or real estate.

To understand the economy, it's helpful to understand gold. In this article, you can track recent trends in gold prices. You'll also learn about how gold should be used by investors, the history of gold, and more about the gold standard.

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