02/12/2013
Monthly Update (December’13)
Rupee prices, which after losing 28.7% for the period ranging from May to August 2013, showed some recovery during the past couple of months but could not held on to the gains made in November. Prices, which firmed by more than 5% in September and 2.20% in October, against Dollar, resumed its weakening momentum in November and was once down by 4% during the month but pared some of its losses to end 1.4% down against the previous month’s close of 61.50/$.
Bullions
No tapering of bond buying in October FOMC meet: US Federal Reserve in its meeting ended on 30th Oct decided not to immediate taper its $85-billion-a-month bond buying programme but reiterated the expansion in economy and improvement in labor markets. If tapering decision will be taken in Fed’s December or very next meeting, could result in outflow of funds from commodities and channeling into bonds and US dollar. Bullions and other commodities will be affected negatively due to it.
Positive proceedings of the talks between Iran and western nations: The six western powers and Iran reached an initial agreement on limiting nuclear proliferation. Iran promised to freeze its nuclear program in exchange for easing the economic sanctions that have gripped the country's access to foreign exchange. This resulted in lower WTI crude prices, lowering global tensions, strengthening Indian rupee and in-turn pulling Gold prices down. This may have a lasting impact on Indian rupee prices which will be negative for the domestic gold prices as well.
High Spot premium and industry demanding for lowering down the import duty: Supply crunch of gold in the Indian market, as a result restriction on gold imports, along with running wedding season has kept the spot premium of gold inflated. The premium is currently $120-$130 an ounce over the London price.
Talking of a relatively smaller time frame prices might trade within the trading band of Rs29500-30500. A breach of the lower band would stretch the decline towards the longer term support of 28000 whereas a rally of another 600-700 points can be seen on a decisive crack of Rs30500 levels. For the coming month, chance of prices softening towards the lower band of the range remains fairly high.
