-- Posted Tuesday, 30 September 2008 | Digg This Article
| Source: GoldSeek.com
GENERAL MARKET CONDITIONS/FUNDAMENTAL FACTOR
US BAIL OUT PLAN REJECTED
What a way to end the third quarter. Gold rose on as the $700 billion bailout plan for the US financial services industry was rejected. Stock markets crashed all over the world. Another new bail out proposal will take time to materialize. Till then gold will remain firm. Gold and other precious metals will benefit on safe haven demand and lack of alternate investment. The rise in gold prices will be accompanied by an equivalent increase in intra day volatility. If the US bailout stalemate drags longer then gold can easily test $1000 in the short term.
Crude oil and base metals will trade with a softer bias on expectations of slower US economic growth in the last quarter of 2008.
CENTRAL BANKS GOLD SALES AGREEMENT – UPDATE
Signatories to the Central Bank Gold Agreement are likely stay below the 500 metric ton limit during the final sale year of the pact, and at a similar level to last year, a central bank official with the Austrian National Bank said yesterday
SNB completes planned gold sales, no more due
The Swiss National Bank said that it had concluded the sale of 250 tonnes of gold, announced in June 2007, and said it had no plans for any further gold sales. The SNB said in a statement it sold 137 tonnes of gold between Sept. 27, 2007 and Sept 26., 2008 after selling 113 tonnes prior to that. It said its total gold holdings were now 1,040 tonnes, adding it planned no further reduction.
In June 2007, the SNB said it would sell 250 tonnes of gold by September 2009, in line with an agreement among European central banks to limit gold sales to 500 tonnes a year.
Gold has been delinked from the US dollar and will remain so as long as global economic uncertainties exist.
COMEX GOLD DECEMBER
Intra day View: Gold needs to break n hold $920-$930 for $950-$960 zone. We prefer a buy on dips strategy as long as gold holds $894 and $869.
INDIAN RUPEE UPDATE
The rupee declined over 6.20% this month to 47.11 against the dollar yesterday. This is the biggest monthly drop since November 1997. This is the lowest level since July 2006.
Overseas investors have sold $9.2 billion more of local equities this year than they bought, according to data from the Securities & Exchange Board of India. They bought a record $17.2 billion in stocks last year which helped the rupee complete its best annual gain in at least 34 years.
The rupee is the second-worst performer this year among the 10 most-active Asian currencies excluding the yen.
India to Exceed Debt-Sale Target as Fiscal Gap `Out of Control'
India will overshoot its borrowing target this fiscal year by almost a fifth as the government spends more to win voters before elections due in seven months. India will sell more bonds and bills than planned to honor commitments to pay higher salaries, guarantee new jobs, write off farm loans and subsidize energy costs.
India plans to raise as much as 390 billion rupees ($8.32 billion) from debt sales in the second half of the year ending March 31, 2009, the finance ministry said on Sept. 26. It didn't schedule any debt auctions for the final quarter of the fiscal year for the first time since it started publishing a sale calendar in 2002.
The government will exceed the six-month target by 71 percent as it adds auctions from January to March, raising a total 670 billion rupees for the half-year period, according to the median estimate in the survey. That would increase the amount raised for this fiscal year to 1.73 trillion rupees, surpassing the target of 1.45 trillion rupees.
EFFECT ON RUPEE: The Rupee will trade with a weaker bias in the short term. A break of 47.22 will result in buying by option traders. In October NRI (Non resident Indians) remittances will be the key (apart from other factors). If NRI remittances fall then rupee will weaken to 48.50 and above in October. RBI Intervention will be the key for the rupee apart from movement of US dollar against Asian currencies. In October as long as 45.00-45.40 holds downside will be limited.
Disclaimer: Any opinions as to the commentary, market information, and future direction of prices of specific currencies, metals and commodities reflect the views of the individual analyst, In no event shall Insignia Consultants or its employees have any liability for any losses incurred in connection with any decision made, action or inaction taken by any party in reliance upon the information provided in this material; or in any delays, inaccuracies, errors in, or omissions of Information. Nothing in this article is, or should be construed as, investment advice.Prepared By Chintan Karnani. Website www.insigniaconsultants.in
