Home Arrow Commodity News Arrow Domestic Gold prices at 5-year highs

Commodity World Roundup

05th Jan – 11th Jan – Domestic Gold prices at 5-year highs, crude oil rallies, Rupee remains range-bound & changes to Gold Monetization Scheme

 Domestic Gold prices at 5-year highs

1. Domestic gold prices rose to a five year high

January 10, 2019

Gold prices are consolidating near a seven-month high in the international market. US-China talks and Fed minutes have kept gold in a tight range. Marginal recovery in the dollar from three-month lows has also been weighing upon prices. Domestic Gold prices also touched a five-year high on the similar ground. Central banks all over the world are also buying gold as they think that it is a safe haven in a risk-averse environment.

Source: Business Standard

2. RBI allowing charitable trust and government agencies to deposit into Gold Monetization Scheme (GMS)

January 09, 2019

The government launched this scheme in 2015 and allowed individuals and joint depositors for an interest rate of 2.25-2.250% per annum, but the response was lukewarm. To increase participation, the government is continuously making efforts either by increasing interest rates or giving more facilities to depositors. Apart from individual and joint depositors, the scheme could now be availed by charitable institutions, the central government, the state government or any other entity owned by the central government or the state government.

Source: Economic Times

3. Rupee remains in range, worries over crude oil keeps momentum locked

January 10, 2019

Positive macro data is supporting positive move in Indian rupee though short-term worries over rising crude oil prices remain intact. The Indian rupee gains marginally against the US Dollar, as the greenback slides on global cues. The rising crude prices and some demand for the American currency from importers are keeping the rally limited.

Source: Money control

4. Crude oil rallied five percent after comment from Saudi on production cut and Fed minutes

January 10, 2019

Oil extended rally after the Federal Reserve's wait-and-see approach on interest rate hikes added to a rosier outlook. Even comments from Saudi Arabia on production cut also supported this move. Saudi Arabia vowed to “stabilize” the market; it was pumping about 800,000 barrels less a day from the record high of 10.2 million barrels per day in November. The amount it would ship overseas in February would be another 100,000 bpd less than January's 7.2 million bpd.

Source: Chron, Bloomberg

5. Food inflation set to rise in coming months

January 08, 2019

Agri commodities along with pulses are trending higher due to lower acreage and production estimates; there is a high probability of increasing food inflation numbers in the coming quarters. Moong and Tur's prices rose more than 30% between October’18 to January’19. The Wholesale Price Index (WPI) and the Consumer Price Index (CPI) are set to rise in the coming election months.

Source: Business Standard

6. Indian demand for gold lost in rural areas after the disappointing monsoon

January 09, 2019

Due to weak rural demand over higher prices, Indian gold imports fell by 14.5% to 759 tonnes in 2018 from 876 tonnes the previous year. Poor monsoons and higher gold prices due to a depreciation of Indian currency against the dollar were the key reasons behind low demand in the year 2018. However, imports of Gold Dore has jumped by 24.3% or 279.70 tonnes in the year 2018 from the previous year.

Source: Financial Express

7. A compulsory delivery contract on MCX for Aluminium and Zinc

January 07, 2019

MCX aluminum and zinc contract change to ‘compulsory' delivery against the current optional delivery which is a welcome step. Aluminum and Zinc will now be settled according to the domestic polled prices and not according to international prices. Domestic players such as Vedanta, Balco, Hindalco, etc will be able to hedge their inventory on the exchange and consumers will be able to protect price risks more efficiently. Compulsory delivery will give an advantage to the consumer in case of price volatility and will also lead to better price discovery into local markets.

Source: Business Line

8. Demand for Indian cotton suffered due to falling in Crude oil prices and a strong rupee

January 08, 2019

The decline in crude oil prices and sluggish demand are the reason for soft cotton prices. Cotton demand has declined across the world while inventories are building up from the previous production. On a positive note, Indian cotton crop estimates have dropped by 1.54% against 34 million bales to 33.5 million bales as per a report from the Cotton Association of India. It looks certain that drop in crop estimates might provide some support to falling cotton prices.

Source: Economic Times

9. Silver prices are finding support due to the recent recovery in gold prices.

January 07, 2019

A key reason for silver’s sharp slump during 2018 was a growing supply surplus because of a recovery in mine production. Though silver prices have rallied along with gold in the first month of 2019, it is difficult to see any sustained recovery occurring during the first two quarters of the year.

Source: Money control