Gold Price Lost $21.60 to Close at $1,644.90 it's Oversold but may Move Lower

Gold Price Close Today : 1644.90

Change : -21.60 or -1.30%

Silver Price Close Today : 29.612
Change : -1.43 or -4.61%

Gold Silver Ratio Today : 55.548
Change : 1.863 or 3.47%

Silver Gold Ratio Today : 0.01800
Change : -0.000625 or -3.35%

Platinum Price Close Today : 1546.20
Change : -46.70 or -2.93%

Palladium Price Close Today : 679.25
Change : -18.10 or -2.60%

S&P 500 : 1,443.69
Change : 7.80 or 0.54%

Dow In GOLD$ : $167.29 
Change : $ 7.50 or 4.69%

Dow in GOLD oz : 8.093 
Change : 0.363 or 4.69%

Dow in SILVER oz : 449.54 
Change : 22.63 or 5.30%

Dow Industrial : 13,311.72
Change : 59.75 or 0.45%

US Dollar Index : 79.25 
Change : -0.089 or -0.11%

The GOLD PRICE lost $21.60 to close Comex at $1,644.90. Silver lost a bruising 4.6% today, 143.3 cents, to smash support at 3100 AND 3000c by closing at 2961.2c.

For both the gold and SILVER PRICE today's move complete a 61.8% correction of the rise that began last June. Both have oversold RSIs, both have MACDs that are scraping their last bottom, both are below the long term moving averages I watch (150 and 200 for gold, 300 and 200 for silver).

In short, they are oversold and ready to get oversold-er. Perverse, but when morale is broken in a market, it has to have its back completely broken before it reverses.

GOLD/SILVER RATIO also points to more deterioration in silver. Today it gapped up to 55.548. and appears headed to close an old gap between 57 and 57.5. Silver and gold are in the waterfall phase, so this spasm could end in a few days. Will certainly pause for Christmas in any event.

Since both metals cut through their uptrend line form the June 2012 low, underneath them now is only the Downtrend line from the 2011 highs, 2900 - 2850c for silver, $1635 - 1620 for gold.

Sounds like I've got it all scoped out, but if I did I wouldn't have gotten it so wrong till now. More than that, markets never do exactly what you expect them to. They move to support, and instead of stopping, pierce through before they reverse, or never quite reach support. It's as if they know what you are thinking, and dodge on purpose. Thus the proverb that "bull markets always to shake off as many riders as they can." Question is, can YOU hold on? Can you stand the heat?

Thus every day markets give you a highly concentrated dose of humility.

What we surely know is that silver and gold remain in a primary uptrend, and that every day brings us closer to the end of this correction. Just stand back and watch it a few days. There's time, it's not running away, and if it starts to climb, well, give it more time still. We need more certainty here like a dying man needs a drink of water.

Be patient. Still, I have to buy at least a little silver here somewhere. Whenever that gap in the gold silver ratio is filled, that'd be about the day.

Aww, shucks! Tomorrow's the end of the world, according to some interpreters of the Mayan Calendar. Say, I have an idea for all y'all who're convinced the world will end tomorrow: y'all send me your money. Probably better wire it, as there's not much time left. While you're at it, mail me your credit cards, too, and any jewelry you're not planning to take with you. 

Dollar index fell 8.9 basis points to 79.245, nothing new there. Euro took advantage of that, hit $1.3300 as yesterday, but too spindly-armed to hold on there. Closed $1.3244, up 0.26%. Yen fell another tiny bit, to 118.49c/Y100. Got to be near the end of that fall.

Stocks suffered a bad beating this morning, but found "sponsorship" in the latter part of the day, and managed to close above 13,300 at 13,311.72, up 59.75. S&P500 rose 0.55% (7.88) to 1,443.69. Weak and wormy, but will climb more, I believe.

Argentum et aurum comparenda sunt -- -- Gold and silver must be bought.

- Franklin Sanders, The Moneychanger
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© 2012, The Moneychanger. May not be republished in any form, including electronically, without our express permission.

To avoid confusion, please remember that the comments above have a very short time horizon. Always invest with the primary trend. Gold's primary trend is up, targeting at least $3,130.00; silver's primary is up targeting 16:1 gold/silver ratio or $195.66; stocks' primary trend is down, targeting Dow under 2,900 and worth only one ounce of gold; US$ or US$-denominated assets, primary trend down; real estate bubble has burst, primary trend down.

Don’t Go Overboard with Your Investments in Glittering Gold

Good returns tempt many to increase exposure to the precious metal, but it should be only seen as a tool for diversification, says Madhu T     Some investors never go beyond headlines, claim investment advisors. They cite the current confusion among gold investors as proof. One set of investors, clearly scared of screeching headlines announcing all-time high in gold prices, would like to wait on the sidelines for a correction before investing in the precious metal. The other set, beneficiaries of the dream run the yellow metal has enjoyed in the past few years, are bombarding their investment advisors with calls to increase their allocation in gold.  "A couple of my clients have sold their longterm investments in stocks and discontinued all their systematic investment plans in equity mutual funds because they wanted to invest in gold. I was shocked to find this when they came for the review of their plan," says a financial planner, who doesn't want to be named. "I tried convincing them that we are investing a small part of the total portfolio in gold mainly for the purpose of diversification. Sure, it is also a hedge against inflation and uncertainties in the global and domestic economy, but that is not an excuse to pull out money from all the other assets and invest in it," he says. Clearly, these investors haven't noticed that gold funds have given only around 13% returns in the last year, while various equity funds have offered 25% to 50% returns in the same period. Probably, that wasn't a headline big enough to catch their attention, says the advisor.  STILL SHINING BRIGHT  "We are still advising our clients to invest in gold, either in gold ETF or in the physical form, depending on their comfort level. This recommendation is purely from an asset allocation point and we don't have a bullish view or breakeven point for gold. We believe the prices will remain firm for some time and it makes sense to invest 5% to 10% of your portfolio in gold," says Amar Ranu, senior manager, Motilal Oswal Private Wealth Management. "Of course, the performance of gold in the current year wasn't that impressive. In dollar terms, it is somewhere around 8.5%. The weakness of the rupee has helped it hold steady in the Indian market. Despite . 11,000 crore under management in ETFs, gold is still "under understood" as an asset in India. Most people are still happy with buying jewellery," says Devendra Nevgi, founder & principal partner, Delta Global Partners. He says that explains the confusion among investors over investing in gold at this juncture.  Experts like him say the confusion will be cleared if investors understand the reasons behind diversifying into gold. One, your financial advisor is asking you to invest a small part of your total corpus in gold because he thinks that will help you spread out your investment across different assets like debt, equity, gold and so on. This will make sure that your investment is not at the mercy of the performance of a single asset. For example, when all other asset classes failed, gold delivered superb returns in 2008 when the world economy was crumbling. The second reason for investing in the yellow metal is to have an effective tool to hedge against inflation and uncertainties in the economy, like indecisiveness of the central government, weakness in rupee, firm oil prices and so on. Lastly, it is also supported by strong fundamentals. For example, most experts believe the prices will remain firm because of the robust demand for gold from consumers and central banks across the world. Also, the uncertainties in the economy will keep it high for a while, as investors will continue to view it as safe haven.  STICK TO YOUR PLAN  "If you are investing for the first time in gold to diversify your portfolio, there is no need to wait for a correction in prices. One good or bad year shouldn't worry you because diversification into gold also lowers the risk of your portfolio and adds stability to it," says Nevgi.  Ranu feels that since one is not getting into gold for trading purposes, the current price levels shouldn't be a cause for concern.  However, experts advise investors against going overboard on the precious metal. "Investors should limit their exposure to gold to a maximum of 15%. And we are not in favour of aggressive allocation to gold because we are bullish on equity," says Ranu. "This is not the time to increase your tactical allocation to gold. That opportunity passed by three years ago. Also, when you are increasing your allocation in gold, you may be cutting down your investment in some other asset. And if that asset happens to be equity, it will be a mistake because many things are going in favour of stocks at the moment," says Nevgi. "In fact, investors should use this opportunity to rebalance their portfolio. If their portfolio is skewed towards gold, they should book profits to get back to their original asset allocation plan. Investors should remember that getting in and out of asset classes depending on the prevailing market conditions completely defeats the purpose of asset allocation and diversification."  madhu.tnair@timesgroup.com

BID TO CURB DEMAND RBI bans loans to buy gold

Mumbai: The Reserve Bank of India (RBI) on Monday notified a total ban on banks from advancing any loans to its customers for purchasing gold in any form, which includes primary gold, gold bullion, gold jewellery, gold coins, units of gold Exchange Traded Funds (ETF) and units of gold mutual funds. 

    In its October 30 policy meet, the central bank had announced this decision. However, the banking regulator said that banks are allowed to give loans for "genuine working capital requirements to jewelers". 
    The notification was issued after it was found that there was a significant rise in the import of gold into India in recent years. The step by the central bank came on concerns that direct bank financing for the purchase of gold in any form — that is bullion, primary gold, jewellery, gold coin, etc — could lead to fuelling of demand for gold in the country. 
    Over the last one year, despite a 10% rise in the price of gold in India, the demand for the yellow metal during the July-September quarter was up 27% on an annual basis, data from World Gold Council showed. 
    Since India remains one of the biggest importers as well as consumer of gold in the world, the surge in gold imports in turn has been putting pressure on the country's trade balance. 
    Primarily this is the reason for the government's recent push to curb gold demand and import, the decision by RBI is a direct fallout of the government's decision, market players said.

Gold demand zooms 27% in Q3

New Delhi: After declining for two straight quarters, gold demand made a strong recovery in the third quarter, surging 27% during July-September, as an appetite for investment in the yellow metal returned and jewellers stocked up for the festive season. 

    Latest data released by the World Gold Council, the agency promoting sales of the yellow metal globally, showed that demand for gold went up to to Rs 65,373 crore, even as global sales fell 14% due to depressed economic sentiment in various countries, including China where demand dipped 8%. A part of the jump in sales in India was on account of a sharp depreciation of the rupee but in volume terms too there was an increase of 9%. Global sales were, however, 11% lower at 1,085 tonnes with India accounting for one-fifth share with total sales estimated at 223 tonnes. 
    The spurt in price as well as customs duty levied by the government had dampened the demand for gold, a favoured savings instruments for most Indian households. But in the September quarter, consumers seemed to have gone back to purchasing gold after postponing their buying decision due to high prices. While gold jewellery demand in India picked up 25% due to restocking by retailers ahead of the wedding season, investment demand, which fell 37% during April-June, registered a 27% rise too. Gold prices have almost doubled in the last three years and increased 14% in the last one year, causing buyers to be cautious about purchases. "In India, the price effect wears off over time and gold demand remains largely inelastic. We will once again set a new consumption record in the following year once we get used to the new price benchmarks," said Jayant Manglik, president, retail distribution at Religare Securities. 
    While retailers witnessed significant dip in purchases in the previous quarters, the period between Dussehra and Diwali turned out to be positive with sales value rising 30-35% as compared to the precious quarter.

A good time to invest in platinum

Platinum has traditionally outperformed gold, but its prohibitive pricing made it difficult to invest in. Now, with gold prices at par with platinum, it may be the right time to bet on it.     Outshined by the glitter of gold is a more rare, but equally precious, metal—platinum. Investing in this noble metal has not caught up in the country mostly because, till date, it has commanded a higher price than gold. However, the zooming price of the yellow metal over the past few years has made platinum more competitively priced (see graph). Currently, one gram of platinum costs 3,062 compared with 3,178 for gold (as on 24 October). "Since the price of platinum is lower than that of gold, it's a favourable time to buy it," says Prithviraj Kothari, president, Bombay Bullion Association.  Where is platinum headed?  Platinum was quoting at a premium of nearly 150% to gold till a few years ago, but its price is almost level to that of the yellow metal now. In fact, over the past year, its trading price has been lower than that of gold. Will platinum continue to stagnate or will it beat gold again after a few years? Experts believe that the current situation may continue for some more time. This is because the global economy is going through a painful restructuring, and the recent jump in gold is due to the easy monetary policies followed by the global central banks to support their economies, as well as the investors' decision to move their money to a safe haven like gold. Till the global economies stabilise and central bankers start withdrawing excess liquidity, gold may move up faster than quasi-precious metals like platinum and silver.      Though platinum may remain under pressure in the immediate future, its outlook is bright in the long term. "Platinum may remain in the range of $1,500-1,700 an ounce ( 2,857-3,238 per gram) in the next few months. However, it should recover within a year," says Naveen Mathur, associate director, commodities & currencies, Angel Broking.      What are the factors that point towards this bullishness? Firstly, there is no fall in demand from investors or jewellers. In fact, the global platinum jewellery demand increased by 3% in 2011, and with the prices already at lower levels, the demand is expected to hike further this year. China is the biggest consumer of platinum and the appreciation of the yuan against the dollar will also help the Chinese consumers.      Secondly, the key platinum producing countries (South Africa, Russia and Zimbabwe contribute around 93% to the global mine production) are struggling with several constraints, such as electricity shortages and increased labour costs, and are unable to increase the production substantially. Platinum prices jumped by 8-9% in September due to labour unrest in the South African mines (it contributes 74% to the global output). While mine production contributes around 80% to the total supply, recycling of platinum from auto catalysts scrap (13%) and jewellery scrap (7%) makes up for the remaining. Since users are delaying vehicle replacement, even the recycling segment has not expanded.      The lower production or increased investment/jewellery demand has failed to lift platinum prices because the global auto industry, which constitutes around 40% to the global platinum consumption, is still suffering from the economic crisis. This means that the price of platinum is expected to remain rangebound with a downward bias in the near term. However, the global economy is going to recover at some point, and when this happens, platinum will start outperforming gold. Buying options  Jewellery  While most consumers in the country prefer to buy platinum in the form of ornaments, they should be careful while buying jewellery. This is because while the making charges may vary depending on the      size and design of the jewellery, these are      double that for gold ornaments. "Platinum is much harder than gold and needs a very high temperature to melt it. Therefore, platinum jewellery is made only in a few places, which pushes up the labour cost," explains      Hasmukh Bafna, president, Gold      Chains & Jewellery Wholesalers Welfare Association. Platinum is also more dense than gold (an identical ring in platinum would be around 40% heavier than the one in gold) and, hence, costlier.      Another thing buyers need to be sure of is the purity of the metal. Platinum is mixed with other metals to make jewellery and the most commonly used are those from the platinum group, such as iridium, palladium, ruthenium and rhodium. Since most of these metals are cheaper compared with platinum, buyers should make sure that the jeweller quotes a lower price than that of pure platinum in the market. The jewellery should be hallmarked, specifically mentioning its purity. For instance, jewellery containing 85% platinum will be marked as 850, while that consisting of 95% of the metal will be marked as 950.      Traditionally, Indians buy jewellery as a back-up plan to bail them out during difficult periods. Ideally, when you sell jewellery, you lose out on the making charges, but in reality, the loss percentage is much more than that for gold. This is because the demand is low, making it difficult for jewellers to resell ornaments. The other issue is checking the purity of the metal. "Almost all jewellers can check the purity of gold themselves and pay the price accordingly, but very few have testing facilities for platinum," says Kothari. So, even if you have no plan to resell the jewellery, ask the retailer about the buyback facility at the time of buying the ornaments. Also, check whether you will get back cash or you will only be able to exchange it for another ornament.  Bars and coins  Since platinum has begun emerging as an investment option, some high-end jewellers have started selling pure platinum (purity of 999) coins and bars. These are available in weights of 1 g, 5 g, 10 g, 50 g, 100 g, etc. In this case also, you need to ask about the buyback facility, expected price deduction and authenticity certificates.  E-platinum  Unlike for gold, there is no exchange traded fund or savings fund for platinum. The only way to buy platinum in paper form is through the e-platinum route available on the National Spot Exchange. This is the best mode for investors as these units are held in the demat form and there are no 'deductions' at the time of selling them. Since the trading of e-platinum has started recently, is there enough volume for investors to participate? "There is enough liquidity in the e-platinum space though the bid-ask price may widen once in a while," says Praveen Singh, senior commodities analyst, Sharekhan.

Are gold prices likely to rise?

After several months of rallying, gold prices in the country have recently corrected, albeit marginally. After mid-May, when spot prices were hovering around the 28,000 per 10 g mark, gold prices got a booster shot from the depreciating rupee and crossed the 32,000 mark in mid-September, despite a fall in international gold prices. The prices in the country continued on their upward trajectory, mainly due to the sharp depreciation of the rupee against the dollar. However, prices have declined since then as the rupee has witnessed a turnaround over the past few weeks. 

What lies in store for gold? 
Central banks across the world are still experimenting with stimulus measures to prop up their respective economies. Such actions will result in currencies losing value and, consequently, add lustre to gold. For instance, the European Central Bank has promised to buy an unlimited quantum of Euro bonds in the future. Chirag Mehta, fund manager, Quantum Gold Fund, says, "As global central banks continue to debase their respective currencies, the inevitable consequence will be higher prices of gold, which will merely reflect the diminishing purchasing power of the global fiat currencies." 
Risks remain 
There appears to be no respite from the global economic uncertainties. Even though fears over Europe's debt contagion have eased for now, the risk of a blowout remains. The US economy continues to grapple with a persistent slowdown, while China is witnessing a decline in growth. All this should bode well for gold, believes Raviprakash Sharma, fund manager, SBI gold fund. "The fundamental drivers for higher gold prices still remain in place and make a case for portfolio allocation towards the asset class," he adds. 
    However, the rupee will play a crucial role in how gold prices move in the domestic market. Lalit Nambiar, fund manager, UTI Gold ETF, says, "It is tough to predict but the rupee is likely to hold at these levels for some time. A slight depreciation in the rupee and pick-up in gold buying will help push gold prices higher." Renisha Chainani, commodity analyst, capital markets, Edelweiss Financial Services, says, "The recent consolidation in gold prices is healthy in the context of a sustained bull market. Investors should consider every dip as a buying opportunity."

Should you opt for a gold savings scheme?

Gold schemes offered by jewellers help build a steady corpus for special occasions, but read the fine print to know whether you gain from them     Kick-starting with Dussehra, the festival season has begun in earnest, and so has the gold-buying season. The celebration will peak next month during Diwali and Dhanteras, which are considered the most auspicious for buying gold. Most Indians still prefer to hoard gold the old-fashioned way—jewellery and coins—rather than invest in paper gold. Should you shell out a chunk of your savings to buy gold now, considering its high price? Over the past few months, the price of gold has zoomed from 28,000 per 10 g in mid-May to 30,765 on 26 October.      Of course, if you buy a sizeable piece of jewellery, such as a bracelet or necklace, during this season, you may end up burning a hole in your pocket. This is why many popular jewellers offer gold schemes. You can enroll in such a scheme for as low as 500 a month for a tenure of 11-36 months. At the end of the chosen period, you will get extra cash from the jeweller, which you can use to buy the ornaments you want. However, before you jump on to such a scheme, here are a few things you should consider.  How does it work?  Gold or jewellery savings schemes come in two forms. A typical one allows you to deposit a fixed amount every month for the chosen tenure. When the term ends, you can buy gold (from the same jeweller) at a value that is equivalent to the total money deposited, including some bonus amount. This conversion is done at the gold price prevailing on maturity. In most cases, the jeweller adds a month's instalment at the end of the tenure as a cash incentive or may even offer a gift item. For instance, popular branded jeweller Tanishq runs the 'Golden Harvest' scheme, wherein you need to invest a fixed amount every month (minimum 500) for 11 months. The twelfth instalment, is paid by the retailer.      There is another form of savings scheme, which lets you book small quantities of gold every month at the prevailing rates, instead of converting the savings into gold at the final price. For instance, multibrand jewellery store Gitanjali Jewels offers a scheme 'Swarna Mangal Kalash', wherein you can book gold every month in multiples of 1 g at the existing gold rate for 18 months. At the end of this period, you can redeem the total amount of gold booked, regardless of the price on the redemption day. However, both types of schemes allow you to buy only jewellery, not gold coins or bars.  What to watch out for  Pay for making charges: At the end of the term, when you actually buy the ornament, the seller will levy making charges. Usually, these are very high and can go up to 30% of the value of the item, depending on the extent of workmanship involved. A high making charge could effectively wipe out any saving you make through the additional instalment or bonus. Some jewellers throw in a 30-50% discount on the making charges, while a few waive it completely in case of plain gold jewellery.  No control over gold price: In many schemes, the jewellery you purchase at the end of the tenure is available at the prevailing market rate. Since there is no way to lock in to the purchase price, you cannot know the actual cost of conversion. If this final price is much higher, your money will fetch a smaller quantity of gold than the one you would have got by booking at the current price. You will only benefit if the price of gold at the end of the term is lower. To avoid making a loss, you could opt for a price protection scheme that lets you buy gold every month at existing rates rather than doing so at the end of maturity. Says Santosh Srivastava, MD, Gitanjali Jewels: "Such a scheme will help customers average out their cost of purchase over a period of time, in the same manner that a systematic investment plan (SIP) in a mutual fund does."      It is also a better alternative as the impact of the final gold price on your actual purchase is nullified. Says Neeraj Chauhan, financial planner, Financial Mall: "Under the fixed price option, you know for sure the quantity of gold you will ultimately get, instead of worrying about the fluctuating gold prices."  Agree to seller's terms: When you opt for any of these schemes, keep in mind that you will have to ultimately buy gold from the same jeweller. This means that you cannot negotiate with him on making charges, which differ from seller to seller. In the normal course, you could have hunted for a good deal by haggling with multiple sellers.  Should you go for it?  These savings schemes make sense if you cannot pay a lump sum to buy expensive jewellery. Buying gold or putting away money for it in small instalments is less of a burden on the wallet than paying a hefty price for it at one go. Srivastava says, "With our gold savings scheme, we help customers plan in advance for any particular occasion, such as a wedding or festival." The schemes that offer a higher cash incentive for a longer maturity savings plan will give you higher benefit.      However, if you are considering gold as an investment avenue, you are better off putting your money in other instruments. The high making charges, higher price of jewellery, and fluctuating gold prices will eat into any returns that these schemes claim to offer. If you want to accumulate cash to buy gold, you can get better returns if you invest in a recurring deposit. This will also give you more control over the place from which you buy and the price at which do it. Another good option is to invest in gold exchange traded funds (ETFs), wherein you can buy units and convert them to physical gold later. There are no making charges or premium involved and the income from gold ETFs is treated as long-term capital gains and taxed at a lower rate if you hold them for one year, compared with three years in case of physical gold. Physical gold also attracts wealth tax.

Scientists change colour of gold

London: Scientists have for the first time found a way to change the colour of the world's most iconic precious metal — gold. 

    Researchers from the University of Southampton have discovered that by embossing tiny raised or indented patterns onto the metal's surface, they can change the way it absorbs and reflects light — ensuring our eyes don't see it as 'golden' in colour at all. 
    Equally applicable to other metals like silver and aluminium, this breakthrough opens up the prospect of colouring metals without having to coat or chemically treat them, delivering valuable economic, environmental and other benefits. 
    The technique could also be harnessed in a wide range of industries like manufacturing jewellery to making banknotes and documents harder to forge. 
    It can be used to produce a wide range of colours on a given metal. ANI

Gold has biggest 1-day drop since July on eco fears

Gold fell over 1 percent to a one-month low on Friday, its biggest daily drop in more than three months, hit by technical selling and tumbling U.S. equities on economic uncertainty around the world.

Gold fell over 1 percent to a one-month low on Friday, its biggest daily drop in more than three months, hit by technical selling and tumbling US equities on economic uncertainty around the world.

Silver and platinum group metals also slid broadly after several US multinational manufacturers led by General Electric CO. gave earnings forecasts that disappointed investors, citing weaker demand in Western Europe.

Also read: Sell MCX Gold Dec around Rs 31350; target Rs 31100: Geojit

Bullion appeared to find support at its 50-day moving average after it briefly broke below that key technical support. It has now erased all of its gains posted after the Federal Reserve in early September launched a third round of bond-buying known as quantitative easing to stimulate economic growth.

"People who rushed in for QE expecting to get a significant lift are getting out of the market," said Frank McGhee, head precious metals trader of Integrated Brokerage Services LLC.

"The longer we don't make a new high, the more people start getting nervous about where gold is trading," McGhee said.

Gold also notched a near two-percent decline this week, its biggest weekly drop in about 4 months. The metal has so far failed to trade above $1,800 an ounce this year.

Some traders said profit-taking could further pressure gold prices, after hedge funds and money managers raised their gold futures positions to their most bullish in nearly 14 months last week, the U.S. Commodity Futures Trading Commission (CFTC) Commitment of Traders report showed.

Spot gold was down 1.2 percent at USD 1,720.90 an ounce by 2:38 PM EDT (1838 GMT), after hitting a low of USD 1,715.79, which marked the cheapest price since September 7.

US COMEX gold futures for December delivery settled down USD 20.70 an ounce at USD 1,724, with trading volume about 10 percent below its 30-day average, preliminary Reuters data showed.

Bullion weakened as German Chancellor Angela Merkel raised new hurdles to using the euro zone's rescue fund to battle the region's debt crisis. Gold was already under pressure from disappointing economic data this week including U.S. home resale and a jump in jobless claims, and signs China's economy has slowed.

BULL MARKET IN QUESTION

Gold's trading well below its record high during European debt worries suggests the metal could see further weakness, veteran trader Dennis Gartman told clients in a note.

"Something's amiss in the gold market and its health is growing more and more suspect," Gartman said.

Gold hit an all-time high of USD 1,920.30 set in September last year.

Spot gold's relative strength index (RSI) fell to below 40 on Friday, down sharply from an overbought level of over 80 in September, indicating some investors might start to look for bargains.

Among other precious metals, silver dropped 2.2 percent to $32.06 an ounce, down over 4 percent for the week for its largest weekly decline in almost four months.

Platinum was down 1.7 percent at USD 1,611.70 an ounce, while palladium slid 2.7 percent to USD 621.70 an ounce.

What is driving prices in guar gum?

Market experts explain price rally for guar gum in terms of its inelastic demand

The January contract of guar gum futures traded at Rs 31,783/100 kg on Friday up more than 25 per cent in just a month. At Rs 9,604/100 kg, guar seed too was at its life-time high.

What is driving this frenzied momentum in the guar complex? Is there strength in the commodity's fundamentals? What are the risks of trading in the commodity at the current levels?

DRIVEN BY DEMAND

From around Rs 6,000/100 kg in the beginning of 2011, guar gum prices have shot up to Rs 23,000/100 kg by end of the year. Guar seeds have trebled in price.

The increase in export demand for guar gum — a derivative from guar seed which is used in petroleum refining, food processing and pharmaceutical industry fuelled the price rally.

In 2010-11, India exported 4.03 lakh tonnes of guar gum, an 85 per cent jump over 2009-10.

Anticipating a similar demand in the following year and eyeing higher realisations on the depreciating rupee, the domestic guar gum exporters started procuring additional quantities of the crop from the market.

This created a tight supply situation in the market stoking prices.

Market experts explain the price rally for guar gum in terms of its inelastic demand. There are no identified substitutes for it, say experts.

Any spurt in global demand for guar gum will see prices hardening in India as the country is the key exporter of the commodity. India produces 80 per cent of the world's total guar gum output in a year.

EXPORTS FIRM, OUTPUT DROPS

We can't, however, completely rule out the speculative hand in price rally in guar gum and seed futures. While the country's total guar gum production for a year is only around 11 lakh tonnes, the National Commodity exchange has already recorded a volume double of this in three months.

While demand has jumped compared to last year, a drop in guar production in the current year, low carry over stocks from last year also support prices.

The Agriculture and Processed Foods Export Development Authority has reported that the exports of guar gum rose 68 per cent to 2.85 lakh MT in the April- September 2011 over the previous year. But, if this demand sustains, it is likely that there will be a supply shortage of guar gum in the country.

The production of guar seed in 2011-12 season has been estimated at around 11.4 lakh tonnes against 15.5 lakh tonnes last year, a 25 per cent drop, on a below normal rainfall in Rajasthan.

SEASONAL COOLING OFF

Prices in the futures market over the last three years suggests a seasonal cooling off for guar seed and guar gum between February and April every year.

Prices move sideways in this period as new arrivals trickle down. This year again, we may find the trend repeating.

Giving his outlook on the guar complex, Mr D.K. Aggarwal, CMD, SMC Investments and Advisors said, "The rally in guar complex is overstretched now; hence upside is restricted in near- to mid-term. One should, however, not expect vertical decline in this counter as fundamentals will remain supportive in 2012."

In the short-term, the Forward Market Commission's action may have some negative impact on prices.

The margin on futures contracts of guar gum and seed have been raised recently to 41.88 per cent and 40.77 per cent respectively from less than 10 per cent.

At current prices, a buyer of one futures contract in guar gum will pay a total margin of around Rs 6 lakh (Rs 1.4 lakh earlier) and Rs 3.5 lakh on guar seed futures.

But as this didn't help cool prices, the market regulator is now considering putting the guar complex in trade-to-trade segment.

Commodities in the trade-to-trade segment are not open for intra-day trades, meaning traders can't square off their intraday position.

There is also concern that if guar prices continue to rise, the watchdog may increase the export duty on guar gum.

Keywords: guar gum futures, Commodity Corner, frenzied momentum, increased global demand in guar seed

NBFC gold loan biz loses shine over tough norms

FADING GLOW New Delhi: After registering rapid growth for the past few years, the gold loan business has taken a hit in the first two quarters of this financial year, owing to the tightening of norms by RBI. Non-banking finance companies (NBFCs) offering gold loans say growth has declined despite increased prices of gold offering better leverage (more loans) to the consumer.      Even as companies expect a slight revival in the third quarter, executives say gold loan growth will be in the range of 10-15%. This is a sharp fall as compared to the last year when major gold loan companies posted an over 50% growth rate.      Earlier this year, RBI had capped the loan-to-value (LTV) ratio for NBFCs at 60%. Prior to that, most NBFCs had been offering LTVs up to 70% of the gold value. Consequently, a large customer base has shifted to the unorganized segment for better returns.      The central bank had also directed NBFCs having half of their assets in gold to have a Tier-1 capital of 12% of riskweighted assets by April 2014. Loans against bullion and gold coins for NBFCs too were banned and the RBI had asked  banks to bring down the credit exposure to a single NBFC from existing 10% to 7.5% of total exposure in the segment. Analysts say these steps are intended to check imports of gold in the country as the government is "highly uncomfortable" with the increased demand for gold loans.      Kerala-based Muthoot Finance, a leading gold loan company, said it witnessed a 5% fall in growth in the first quarter this year as compared to the same period last year. Gold under custody too declined from 137 tonnes to 130 tonnes in March-June. "We are looking at a flat growth in the second quarter. We hope growth picks up to at least 10-15% in the third quarter," Muthoot Finance CFO, Oommen Mammen, said. Because of the new regulatory framework, the company is currently in a consolidation phase. Muthoot Fincorp, another gold loan company, is looking at coming up with 50-100 stores. It witnessed a growth rate of 3% over last year.      However, industry experts remain positive.      "The business will definitely continue despite the government doing everything to see that it does not pick up," said Gnanasekhar Thiagarajan, director, Commtrendz Research.

Foodgrain output to fall by 10%: Pawar

Govt Expects To Make Up In Next Season NewDelhi:Country's foodgrains production is projected to decline by 10% in the kharif season of this year at 117.18 million tonne due to deficient monsoon and drought in some states.      However, the government expects to make up for the decline in output during the Rabi season (winter sown crop). Foodgrains output stood at 129.94 million tonnes (MT) in last year's Kharif season. The production of rice — a major Kharif crop — is expected to fall to 85.59 MT compared with 91.53 MT in the last Kharif (summer crops).      "As per the first advance estimate, total foodgrains production is expected at 117.18 million tonnes in the kharif season of 2012-13 crop year, lower than the last year but higher than the average production of 113 million tonnes in the last five years," agriculture minister Sharad Pawar told reporters here.      "Whatever shortfall we have seen in kharif season will be covered in rabi," the minister said.      Pulses production is estimated at 5.26 MT in Kharif this year against 6.16 MT last year, he said, adding the production of coarse cereals is estimated to fall to 26.33 MT from 32.26 MT.      Deficiency of monsoon stands at 5% so far. Karnataka, Maharashtra, Gujarat and Rajasthan have declared drought in over 390 taluks.      Asked if fall in foodgrains output will impact prices, Pawar said: "Last year's stock position of wheat and rice is extremely good. There is no problem. I am worried prices of wheat, atta and sugar are going up in the market. I do not understand the reason".  Surplus grain sale plan irrational: CPM  New Delhi: Opposing government's decision to sell 10 million tonnes of surplus food stock to bulk consumers, CPM on Monday demanded immediate reversal and said the stock should have gone to those in hunger.      "The government through this decision intends to transfer food subsidy as largesse and to benefit traders and manufacturers, including big companies, and not to those in hunger and food insecurity," CPM politburo said in a statement. Disputing government's claim that the move was intended to control prices, the party said it is "totally irrational." If government was interested in controlling prices, "a most obvious step would be to increase supplies through PDS," it added. TNN

Govt defers call on hiking sugar price

New Delhi: Keeping the festive season in mind, the Manmohan Singh government, which is on a reforms-fiscal correction mode, hit the pause button on Monday, deferring a decision on scrapping subsidy on levy sugar under the public distribution system (PDS) quota. Removing the subsidy would have meant a steep hike in the price of the commodity to Rs 23 per kg from Rs 13.50/kg. 

    The relief is expected to last till December. 
    The Cabinet also did not take up the proposal to computerize PDS, a move aimed at digitizing ration cards, and fully computerize the supply management chain of the Food Corporation of India. 
    But in a major relief for the common man, the Union Cabinet on Monday extended a control order on commodities from October 2012 to September 2013, which will help moderate prices of pulses, edible oils and oilseeds and ensure their availability at fair prices. 
2,300cr package for former servicemen T he government has cleared a Rs 2,300-crore additional pension package for former servicemen but stopped short of granting them full one-rank, one-pension. P 10 CWC to meet today, revamp tops agenda Amidst indications of a Cabinet rejig, a CWC meet has been called on Tuesday. The reshuffle is being looked forward to as, among other things, Rahul Gandhi has said he is ready for bigger role. P 9 Cabinet clears plan to check malnutrition 
New Delhi: The Union Cabinet's decision to extend a control order on commodities to September 2013 will enable state governments to continue with effective de-hoarding operations under the Essential Commodities Act, 1955. Aiming to tackle under-nutrition in children below three years, the Cabinet has paved the way for the rollout of a restructured Integrated Child Development Scheme in the 12th five year Plan (2012-17). The cabinet committee on economic affairs has cleared the plan with estimated financial implications of Rs 123,580 crore. The restructured ICDS will be launched in the next three years, starting with 200 high-burden districts identified by the government. 
    The flagship scheme, which focuses on maternal and child health and nutrition, will emphasize early development in all children below six years of age, improved care and nutrition of girls and women and reduce by a fifth anemia prevalence in young children, girls and women.

Take SIP Route to Start Investing in Gold ETFs

Vidyalaxmi has some sensible advice for those undecided on gold purchases now Gold is shining bright. The metal rose for a third successive month in August with a gain of 4.8% — the largest one-month increase in price since January. And with the global economy in turmoil, it is only expected to rise further. "First, hot money is chasing commodities, which has pushed up the prices of gold, silver and other commodities.  Second, whenever an economy encounters a big calamity, investors tend to rush towards gold as a stable investment option," says Richa Karpe, director (investments), Altamount Capital. "Indians and Chinese have been traditional investors in gold. But now several investors in Western countries who didn't have any exposure in gold are buying it even at higher prices. Now, several family offices have advised their international clientele to have 5-10% of their entire financial portfolio to be invested in gold," Karpe adds.  There are several factors that support the higher prices of gold at current levels. Also, Indians associate buying gold with the festive season and auspicious days, which are around the corner. The expected increase in demand during the festive reason will only push up the price of gold. That is exactly why experts ask investors to hold on to their gold investments for some more time.  "I will not recommend any investor to book profit now because of the ongoing domestic and global uncertainties. They should hold on to their investments in gold for now," adds Richa Karpe.  As for new investors, experts ask them to limit their exposure in gold to 5-10% of their total portfolios. "If an investor has less than 10% exposure in gold, he/she can increase it up to 10% in a staggered manner," says Amar Ranu, senior manager (wealth management), Motilal Oswal Wealth Management.  NEW INVESTORS  "Even though the price of gold has touched new peaks, an investor can enter the market through the SIP route today as it takes care of the average cost. This is because the price of gold is going to rise further from here given the uncertainties coupled with the upcoming festive season," says Ranu. "Certain brokers are offering SIP facility in gold ETFs. However, an investor should avoid investing lump sum amount in gold today as you cannot time the market," he adds. "For retail investors, gold ETFs are the preferred vehicle for investing in gold. While they do charge an annual fee, they are more tax efficient than physical gold, easily tradable, available in small denominations and can be kept in demat accounts," says Rishi Nathany, CEO, Dalmia Securities. In case of gold ETF or a gold fund of funds, the investor will not see physical gold. Hence the custodian of the gold or the AMC should be trustworthy and be financially sound.  Investors who don't have a demat account can consider gold fund of funds which invest in gold ETFs. You can invest in physical gold by buying gold bars or coins, but it comes with disadvantages like storage costs and wealth tax. Moreover, you have to conduct due diligence on the purity of the gold before buying. "The form of investment also depends on the end-use of gold. If parents are investing in gold to make jewellery for their children in the future, I would advise them to invest in coins/bar. If it is for retirement or just another investment for retirement, I would recommend ETFs as they act like quasi cash," says Suresh Sadagopan, certified financial planner, Ladder 7 Financial Advisories.  THE WAY AHEAD  "However, as an investor you should know that even as gold prices have run up in the recent past, it does not offer you an interest income unlike other instruments. It does not even offer a dividend like equity instruments. It offers capital appreciation in line with gold prices," says Rishi Nathany.  Also investors have a tendency to chase a single asset class when it runs up in one direction. "You should stick to your asset allocation strategy. You can be marginally overweight on gold now and underweight on another asset class because of the external factors. But you should never pull out all your money from other asset classes and move it into gold," cautions Richa Karpe.  vidyalaxmi.v@timesgroup.com

MCX Takes on Rivals with Sharply Lower Fee

Offers introductory fee of . 25 lakh against NSE's . 1.5 crore for equity and derivatives, puts net-worth requirement for brokers at . 30 lakh     MCX Stock Exchange (MCX-SX) kicked off its membership drive on Wednesday with an introductory offer of . 25 lakh for its equity and equity derivatives segments, marginally lower than BSE's and significantly below NSE's . 1.5 crore for both the segments.  However, the bourse said the introductory offer would be valid only till October 18, after which the charge would be doubled.  Most brokers termed the offer "fairly good" and said pricing was an important factor as people were putting money on a new exchange that was yet to stand the test of time.  "We would like to avail of the introductory offer, which I think is fairly good," said Nirmal Jain, chairman, India Infoline. "Most large brokers typically like to be members of all the exchanges and so I'd say pricing is important, especially when it's a new bourse that has yet to reckon with competition." Agreed Motilal Oswal, chairman, Motilal Oswal Financial Services. "I would say MCX-SX's offer is pretty attractive..... Over a period of time, I think most of us would like to see product differentiation with respect to new index or some such thing."  MCX fee for trading and selfclearing members on equity and equity F&O segments stands at . 20 lakh, and the admission fee is . 10 lakh. However, a . 5 lakh rebate is being given against transaction charges, making the total charge . 25 lakh.  Compared with this, a trading member pays . 1.5 crore for accessing both segments on NSE. The net-worth stipulation for an MCX-SX trading member is . 30 lakh against . 1 crore for NSE.  After the offer period, MCX-SX will charge members . 20 lakh each as deposit for equity and equity F&O memberships and . 10 lakh as admission fee, taking the charge to . 50 lakh. The deposit is refundable, usually three years after a member surrenders his/ her membership.  Sudip Bandyopadhyay, MD & CEO, Destimoney Securities, felt most large brokerages would take MCX-SX membership. He added that the fee structure of MCX-SX could not be "too out of line" with the market. "I will take membership of MCX-SX, but I think, over a period of time, the fees would be hiked," he said. KR Choksey, chairman, KR Choksey Securities, said the response to the offer could have been better if markets were more "buoyant". Choksey added that he would wait and see how the new exchange fared before taking membership of it.

Gold climbs to a new high of 31,980

New Delhi/Mumbai: Continuing its upward swing, gold on Wednesday surged Rs 130 to a new all-time high of Rs 31,980 per 10 grams in the national capital on sustained buying by stockists amid a firming global trend.      However, silver met with resistance at prevailing higher levels and lost Rs 200 to Rs 60,000 per kg.      In Mumbai, the yellow metal surged Rs 160 to Rs 31,480, also a new high for the financial capital. Pure gold (99.9 purity) similarly rose by Rs 155 to finish at Rs 31,620 per 10 gm from Rs 31,465.      Silver ready (.999 fineness) rallied by Rs 325 per kg to conclude at Rs 61,325 as against Rs 61,000 previously.      In New York, gold surged to its highest level pinning hopes over further stimulus measures from global central banks to boost their respective economies. AGENCIES

In Delhi, gold glitters at record 31,035/10g

Yellow Metal Rallies On Bullish Global Cues New Delhi: Gold price hit a record high of Rs 31,035 per 10 grams on Thursday, deepening concerns of a slowdown in the demand for the yellow metal at home. With consumer buying already in the red due to an uncertain economic scenario, the rise in price has come as a double whammy for jewellers and traders amid tepid demand. In Mumbai too, gold surged to an all-time high of Rs 30,515.      High inflation leading to a negative buying sentiment has marred purchase of gold —both in investment and jewellery form. Most consumers have postponed their purchases, especially around a time when the industry expected a surge in sales.      Analysts say gold prices have rallied to fresh highs on the back of bullish cues in the overseas market. International prices rose in anticipation of a fresh round of fiscal stimulus by the Federal Reserve. By late Thursday evening, gold neared $1675 an ounce in the international market — the highest price since April 13.      Although the precious metal is still some distance away from reaching an all-time high globally, in India the spike has been sharper as the rupee has depreciated considerably over the last 12 months, making imports more expensive. "People have moved from dollar to precious commodities causingprices to surge. With international price increasing and the rupee remaining stable, this is going to impact domestic demand pretty badly," said Gnanasekar Thiagarajan, director Commtrendz Research, a research firm. Even with the festival season around the corner, the steep increase in price of gold has led jewellers and traders to reduce their growth targets for the current quarter. While industry watchers expect some buying to continue, it will remain restricted only to consumer needs.      The increase in price of gold has already dampened sales target for branded jewellery retail chain Orra. While price increases always momentarily impact consumer buying attitude, surpassing the 30,000 barrier point will lead to signs of slowdown, Orra CEO, Vijay Jain said. Though the retail chain is expecting buying mood to return to normal around Diwali, the company is not expecting growth to be as robust as last year. "This is a major concern for us. First, buying sentiment is not so positive, and now this price rise has compounded the problems for the industry. It will come as a shock to the consumers. It might take some time before buying becomes steady again," Jain said. A customs duty of 4% has also added to the price pressure. Sales were significantly hit during last quarter when jewellers protested the implementation of a 1% excise duty, which was later withdrawn. "There are multiple things that are affecting the demand for gold right now. Our business has been impacted due to the duty hike and then due to poor monsoons. The price rise will further postpone any pick-up in demand," said N Balaji, general manager, MMTC.      Analysts said it might take some time for demand to shoot up again as consumers will take time to adjust with the increased price.

TAKING STOCK US Weighs Release of Oil Reserves

Move aimed at preventing Iran from enjoying a windfall as oil prices surge The White House is "dusting off old plans" for a potential release of oil reserves to dampen prices and prevent high energy costs from undermining sanctions against Iran, a source with knowledge of the situation said on Thursday.  US officials will monitor market conditions over the next few weeks, watching whether gasoline prices fall after the September 3 Labour Day holiday, as they historically do. It was too early to detail the size of any release from the US Strategic Petroleum Reserve and other international stockpiles if a decision to proceed was taken, the source said.  Oil prices have surged in recent weeks, with Brent crude prices closing in on $120 a barrel, up sharply from below $90 a barrel in June. The United States and other Group of Eight countries studied a potential oil release in the spring but shelved the plans when prices dropped.  As prices rise again, US officials were now collecting information from the market about potential needs and studying futures, production numbers and data on Iranian oil exports. "The driving force in this is both impact on the economy and impact on the Iran sanctions policy," the source said, noting that Washington did not want rising oil prices to create a windfall for Iran while international sanctions were having an effective impact on its crude exports and revenues.  The United States has not yet held talks with international partners about a coordinated move. The source noted that Britain, France, Germany and other partner nations in the Paris-based International Energy Agency (IEA) were receptive to a potential release a few months ago when conditions were similar. Those countries were concerned about the impact of high oil prices on the global economy and Iran then, and those concerns remain equally relevant now. "The logic behind a potential release in the spring is at least if not ... more true today," the source said. Within the United States, tapping reserves could spark criticism from Republicans, who would cast it as a political moveto boost Democratic President Barack Obama's chances in the November 6 election. The source said the White House had not discussed political ramifications because a decision on a release had not been made. — Reuters