Thursday, July 11, 2013
Gold sees a relief rally as the FOMC minutes contained no new, hawkish information
Bullion metal prices ended higher on Wednesday, 10 July 2013 at Comex. Comex gold futures prices ended the U.S. day session with slight gains on Wednesday, but then rallied to near the daily high after the release of the U.S. Federal Reserve Open Market Committee meeting minutes. Gold saw a relief rally as the FOMC minutes contained no new, hawkish information.
Gold for August delivery ended higher by $1.5 (0.1%) at $1,247.4 an ounce on the Comex division of the New York Mercantile Exchange on Wednesday.
September silver ended higher by $0.03 (0.1%) at $19.17 an ounce on Wednesday.
The market place was just a bit surprised by the FOMC minutes reporting that around half of the 19 committee members are in favor of starting to wind down or “taper” its monthly bond-buying program, also known as quantitative easing, by the end of this year. The minutes also said most FOMC members want to see more economic data before making any firm conclusions on ending QE. The minutes mainly discussed how Fed Chairman Ben Bernanke should articulate the Fed's monetary policy to the public. The consensus in the market place at present is that the Fed will start to cut back its bond purchases sometime later this year.
China's latest manufacturing report was released on Wednesday and it came in on the weak side. Exports fell 3.1% in June, on an annualized basis. A 3.3% gain was expected. Chinese imports were down 0.7% on the year, while a 5.5% increase was forecast. The news had a somewhat limited impact on the market place, as the Chinese premiere said Wednesday China will continue on its path of long-term reform.
European stock markets were pressured on Wednesday after the Standard & Poors ratings agency lowered Italy's sovereign credit rating. The European Union's sovereign debt crisis has been on the back burner of the market place for several months, but the situation has never been fully cleared up and could at any time heat up to roil world markets.
The U.S. dollar index, which weighs the strength of the dollar against a basket of six other currencies, fell by 0.3% on Wednesday.
Among economic data expected at Wall Street today, May wholesale inventories decreased 0.5% while the consensus expected an uptick of 0.3%. Today's report followed last month's revised decrease of 0.1%.
At the MCX, gold prices for August delivery closed higher by Rs 93 (0.4%) at Rs 26,103 per ten grams. Prices rose to a high of Rs 26,251 per 10 grams and fell to a low of Rs 25,976 per 10 grams during the day's trading.
At the MCX, silver prices for September delivery closed higher by Rs 6 (0.01%) at Rs 40,174/Kg. Prices opened at Rs 40,060/Kg and rose to a high of Rs 40,500/Kg during the day's trading.
The market may open on a firm note as Asian stocks surged after US Federal Reserve Chairman Ben S. Bernanke said on Wednesday, 10 July 2013, that the world's biggest economy will continue to need stimulus. Trading of CNX Nifty futures on the Singapore stock exchange indicates that the Nifty could gain 94 points at the opening bell.
Mahindra & Mahindra (M&M) has announced that it would be observing 'No Production Days' at its automotive plants for a period ranging from 1 to 8 days during the remaining period of July 2013 with a view to align production with sales requirements. M&M also said that its wholly owned subsidiary viz. Mahindra Vehicle Manufacturers would also be observing 'No Production Days' for about 8 days during the remaining period of July 2013 at its plant situated at Chakan in Maharashtra.
M&M said that the management does not envisage any adverse impact on availability of vehicles in the market due to adequacy of vehicle stocks to serve the market requirements.
UltraTech Cement said after market hours on Wednesday, 10 July 2013, it has commissioned its clinkerisation plant of 3.3 million tonnes a year (mtpa) at Malkhed in Karnataka.
Zee Entertainment Enterprises turns ex-dividend today, 11 July 2013, for dividend of Rs 2 per share for the year ended 31 March 2013 (FY 2013).
Thermax turns ex-dividend today, 11 July 2013, for dividend of Rs 7 per share for the year ended 31 March 2013 (FY 2013).
Karur Vysya Bank turns ex-dividend today, 11 July 2013, for dividend of Rs 14 per share for the year ended 31 March 2013 (FY 2013).
Andhra Bank turns ex-dividend today, 11 July 2013, for dividend of Rs 5 per share for the year ended 31 March 2013 (FY 2013).
Biocon turns ex-dividend today, 11 July 2013, for total dividend of Rs 7.50 per share for the year ended 31 March 2013 (FY 2013).
Key benchmark indices edged lower on Wednesday, 10 July 2013, on caution ahead of the release of minutes of the Federal Open Market Committee (FOMC) meeting on 19 June. The S&P BSE Sensex shed 145.36 points or 0.75% to 19,294.12 on that day, its lowest closing level since 3 July 2013.
Foreign institutional investors (FIIs) bought shares worth a net Rs 75.46 crore on Wednesday, 10 July 2013, as per provisional data from the stock exchanges.
Asian stocks rose on Thursday, 11 July 2013, after US Federal Reserve Chairman Ben S. Bernanke said on Wednesday, 10 July 2013, that the world's biggest economy will continue to need stimulus. Key benchmark indices in China, Hong Kong, Indonesia, Singapore, South Korea and Taiwan rose by 1.29% to 2.12%. Japan's Nikkei Average fell 0.17%.
The Bank of Japan announces its policy decision today amid speculation the central bank won't add to stimulus efforts. The BOJ will leave its bond-buying program unchanged as per market expectations.
South Korea's central bank on Thursday left its policy interest rate unchanged at 2.5% amid low inflation, uncertainty over the Federal Reserve's bond purchases and China's economic slowdown.
US stocks ended little changed on Wednesday after minutes from the Federal Reserve's last meeting had multiple members looking for more improvement in the labor market before cutting the pace of central-bank bond purchases.
Bernanke said that highly accommodative monetary policy will be needed for the foreseeable future after a speech in Cambridge. Meanwhile, minutes of the Fed's June meeting showed that while several members judged that a reduction in asset purchases would likely soon be warranted, many want to see further improvement in the labor market before reducing the $85 billion-a-month quantitative easing program.
At a press conference following the June 18-19 meeting, Federal Reserve Chairman Ben Bernanke said the central bank could start reducing its $85 billion in monthly bond purchases later this year.
Meanwhile, Brazil's central bank late Wednesday, 10 July 2013, raised the country's benchmark interest rate to 8.5% from 8%, marking the third consecutive rate increase of a half-percentage point each