Commodity Trade Mantra

Gold Demand rise expected on China Holiday sales

Gold Demand rise expected on China Holiday sales

Gold Demand rise expected on China Holiday sales

Gold Jewelry & Gold Coins demand in China is expected to rise as sale offers combined with an improving economic outlook in the world’s second-largest economy are set to give retail sales a boost during the biggest buying season of the year. China’s retail sales for January and February may rise 15.4%, the fastest pace in 13 months. Business is presumed to be better than last year during the week long holiday that celebrates the beginning of the Year of the Snake. With the population getting wealthier, it’s a time of mass spending. The Lunar New Year is a period when Chinese consumers splurge on everything from beauty products to Gold and Silver Jewelry to lavish family dinners. Steeper discounts, longer promotion periods and Valentine’s Day falling during this year’s festival period will help drive purchases next week. The Gold Bullion & Jewelry sectors may be among the top gainers this year.

Gold Demand rise expected on China Holiday sales

Chow Tai Fook Jewelry Group Ltd., the world’s biggest jeweler by market value, has rolled out Snake-design pendants, Gold Coins and Gold Bars. The company’s website on online retailer T-Mall shows a joint new year and Valentine’s Day promotion that offers discounts of as much as 15% on some jewelry, reported Bloomberg. China’s exports and imports rose more than estimated in a January that had five more working days than last year, helping sustain a growth rebound in the world’s second-biggest economy. Overseas shipments increased 25% from a year earlier, the customs administration said today, compared with the 17.5% median estimate in a Bloomberg News survey. Imports rose 28.8%, more than the 23.5% median estimate, and inflation was 2%. The trade surplus of $29.15 billion was above the $24.7 billion median projection and compares with a $27.1 billion excess a year ago. China’s Gross Domestic Product rose 7.9% in the final three months of 2012 from a year earlier, halting a seven- quarter deceleration. The World Bank forecasts economic growth in the Asian nation will accelerate to 8.4% this year, more than four times the pace of the US, and versus a 0.1% contraction in Europe. Next month, the Communist Party will complete the second phase of a once-a-decade power transfer that has Xi Jinping succeeding Hu Jintao as president and Li Keqiang replacing Premier Wen Jiabao. A pick up this year would mark a reversal from 2012, when data from China’s Ministry of Commerce showed holiday sales at the country’s main retailers and restaurants rose at the weakest pace since 2009. Sales during the week-long break last year climbed 16% to 470 billion Yuan. Gold and Silver Market trading volumes may remain light for the week though, due to the absence of Chinese market players – Shanghai Gold Exchange.

Copper imports by China, the world’s largest consumer of Copper, advanced by 2.9% in January from a month earlier as trading firms bought the metal before Lunar New Year in preparation for a recovery in demand in March. Inbound shipments of refined metal, alloy and products were 351,000 metric tons last month. That compared with 341,211 tons in December and 413,964 tons a year earlier.

Turkey not swayed by US sanctions but Gold Demand & flow into Iran to decline:

Turkey will not be swayed by U.S. sanctions pressure to halt Gold exports to Iran but Tehran’s demand for the yellow metal may fall this year, Economy Minister Zafer Caglayan said on Thursday. U.S. officials are concerned that Turkey’s Gold sales, which allow Iran to export Natural Gas, provides a financial lifeline to Tehran, which is largely frozen out of the global banking system by Western sanctions imposed over its nuclear program. Trade in Turkish Gold Bars to Iran via Dubai is drying up as banks and dealers increasingly refuse to buy the Gold Bullion to avoid sanctions risks associated with the trade. Turkey has a six-month U.S.waiver exempting it from financial sanctions against Iran, which is due to expire in July. “We will continue to make our gold exports this year to whoever seeks them. We have no restrictions and are not bound by restrictions imposed by others. There may be a decline in demand for gold exports, but sanctions have got nothing to do with it,” the Turkish minister told reporters, reported Reuters.Turkey,Iran’s biggest natural gas customer, has been paying for oil and gas imports with Turkish liras, because sanctions prevent it from paying in dollars or euros. Iranians then buy gold in Turkey, and couriers carry bullion worth millions of dollars in hand luggage to Dubai, where it can be sold for foreign currency or shipped to Iran. The spotlight on the gold-for-gas exchange contributed to a cut in Turkey’s gold exports to the United Arab Emirates (UAE) to some $400 million in December from nearly $2 billion in August, according to the latest official trade data. A Turkish official told Reuters that trade with Iran through a third party was no longer allowed under tighter U.S. sanctions which went into effect on Wednesday. “For example, Halkbank would not be able to be an intermediary in India’s oil purchases from Iran,” he said.

Sharp swings in Gold and Silver on comments from Draghi & others:

A sharp sell off in Gold and Silver Markets occurred amid news that European Central Bank chief Mario Draghi said the Eurozone economy was on the upswing, but hinted he may be a bit worried about the recent appreciation of the Euro currency. That triggered an immediate downside in the Euro. Draghi’s voice – his most effective weapon, yesterday caused the euro’s biggest drop in seven months by suggesting its recent appreciation could damp inflation, a signal that further interest-rate cuts remain a possibility. His pledge in July to buy government bonds precipitated a sea-change in sentiment that helped to shore up the 17-nation euro economy, yet the ECB hasn’t spent a cent so far in its so-called Outright Monetary Transactions program. The ECB “is becoming a master of verbal intervention,” Danske Bank economists wrote in a research note. Draghi yesterday “managed to dampen recent de facto tightening without taking any action, much as was the case with the OMT program, which has so far managed to lower Spanish and Italian bond yields without buying a single bond,” they said. Crude Oil prices also fell to the lowest level in two weeks in New York as ECB – European Central Bank President Mario Draghi said the Euro’s strength could hamper an economic recovery, curbing fuel demand. Simultaneously as luck would have it, the US Dollar index rallied on news that weekly US jobless claims fell by 5,000. That acted as a double whammy for Gold and Silver but one which did not last more than a few minutes. Gold Bulls seem to be on a “Buy the dip” trip of late. Gold Prices gained support on declines & soared to the day’s high & also the previous close but again saw some downside swings. Comex Gold and Silver Futures ended almost flat after choppy movements & swings. It could again be timely luck that US Federal Reserve governor Jeremy Stein’s & Chicago Fed President Charles Evans’ comments triggered some upside volatility into the Gold and Silver Market. In a speech in St. Louis, Stein said US credit markets are beginning to see signs of strains due to the very easy monetary policy of the Federal Reserve in recent years. Some credit markets, such as corporate debt, are showing signs of potentially excessive risk-taking, while not posing a threat to financial stability, Stein said. Evans was the first official to propose linking the central bank’s benchmark rate to economic thresholds, which the committee did for the first time when it set its 6.5% goal. The Chicago Fed chief said he doesn’t foresee unemployment dropping to 6.5% from January’s 7.9% until about the middle of 2015. The US Federal Reserve may stop its asset-purchase program before unemployment falls to 7%, he said. Gold and Silver Prices again slipped afterwards. Daily movement range in Gold and Silver Prices have been narrowing, as alerted last week to occur anytime soon. A breakout of the narrow trading pattern is imminent. Especially, Silver Prices swings will get narrower & keep traders confused on the daily trade range, before Silver Mania finally hits. Many traders & investors may see themselves left-out on the sidelines as the Silver ride soon takes off. Buy your tickets & confirm your seats now for the Silver Price “Flight to Eternity. A potential roadblock to US GDP growth this year is the expected shifts in fiscal policy, thus it appears to be too early to anticipate a pullback in the size of Fed’s QE program. Traders & Investors may soon shift focus on Gold and Silver markets as other risk investing instruments & markets crack & show signs of fatigue or weakness. To add to the expectations of an increase in Gold Demand, India, the world’s largest Gold consumer, may see demand pick up in its Gold Market on the rising Rupee against the US Dollar. A rise in the Rupee tends to make the dollar denominated Gold cheaper & more attractive in the local market.

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