MCX - WEEKLY NEWS LETTERS
INTERNATIONAL NEWS
✍ PRECIOUS METAL
✍ BULLION
Silver prices slipped from highs as U.S. home re-sales posted their sharpest drop in five years in November. The prices stayed higher earlier as the dollar slipped against a basket of currencies on Tuesday as more traders booked profits on bullish greenback bets following the Federal Reserve's interest rate increase last week.
Silver futures ended lower in the domestic market on Wednesday as investors and speculators exited positions in the precious metal as robust US economic data showed a strengthening recovery in the world’s biggest economy, vindicating the US Federal Reserve’s decision to raise interest rates for the first time in almost a decade last week, curbing the lure for the precious metal as a store of value. US consumer spending rose the most in three months, up by 0.3 per cent in November from the previous month, consumer confidence hit the highest level in five months in December, and sales of new homes rose last month. At the MCX, Silver futures for March 2015 contract closed at Rs 34,215 per kg, down by 0.21 per cent after opening at Rs 34,175, against the previous closing price of Rs 34,286. It touched the intra-day low of Rs 34,065.

Gold held a decline after the U.S. economy expanded faster than estimated last quarter, boosting the outlook for further increases in interest rates. The U.S. economy expanded at a revised 2 percent annualized rate, a government report showed on Tuesday, beating the median forecast in a Bloom berg survey calling for a 1.9 percent increase. Another report showed consumer spending excluding food and fuel rose at a faster pace in the third quarter than previously estimated, helping to alleviate concern that inflation is too low, which supported the prices from lower levels
India’s gold import bill rose 19 per cent in the first half of the current financial year (April 1 to September 30), despite government efforts to reduce this. The balance of payments data, issued on Tuesday, showed $17.5 billion (Rs 1.16 lakh crore) of import in the period, from $14.65 bn in the corresponding period last year “Clearly, consumers’ appetite has not reduced despite the government’s effort to do so through sovereign gold bonds," said a senior executive in the sector, not wishing to be named. The bill for the July to September quarter was $9.9 bn, a 31 per cent rise from $7.6 bn in the same period last year. And, a 33 per cent jump from the import bill of $7.5 bn in the April–June quarter this year. The World Gold Council, market development organization for the mining industry, had estimated India’s gold import at 464 tonnes in April–September, as against 431 tonnes in the same quarter last year. During the

September quarter last year, the import was 501 tonnes. The total for 2014-15 was 961 tonnes of import; this year, WGC believes, it will exceed 1,000 tonnes. G V Sreedhar, chairman of the All India Gems and Jewellery Trade Federation, concurs, noting the sharp global fall in gold prices. Gold prices have been falling consistently over six quarters. In July–September, the average was $1,125.3 an ounce, from $1,282.1 an oz in the same quarter last year and $1,193.7 an oz in the June quarter this year. Which also means the import bill is likely to be five or six per cent less in value terms, despite a rise in volumes.
“2015 has been a fascinating year for the gold market, with strong demand from central banks, Asian markets and the European bar and coin market. The pro-gold schemes introduced by the Indian government and further internationalization of the renminbi (China's currency), alongside the increasing transparency of Chinese gold reserves, will continue to improve the market next year. Gold’s role as a portfolio diversifier, a wealth preservation tool and a tail-risk hedge will continue to prevail, due to expensive stock valuations and high liquidity risks. Finally gold’s cultural significance endures as we look ahead to 2016," said Alistair Hewitt, head of market intelligence at WGC. Asian markets continue to be strong drivers of demand, with both India and China's up year-on-year as of the financial year's third quarter.

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