ETF investors make up for missing gold buyers

Record prices have forced many of India's traditional gold buyers out of the market in recent months with jewellery demand remaining largely lethargic, but the recent rally in prices is creating a new source of demand--investors who are looking for the safety, convenience and steady returns of exchange traded funds, or ETFs, backed by gold.
Even among investment products, ETFs are gaining an upper hand over gold bars and coins because of the easy liquidity and lower costs associated with ETFs, analysts say.
India has for long been the biggest market for gold, but much of that demand has traditionally been from rural households which buy gold in the form of jewellery.
While India continues to be a price-sensitive market with every rally hitting demand for gold, the rising popularity of ETFs indicate that going forward, the Indian market could see less of an impact from rising prices at a time when gold is again in the limelight because of a falling dollar and increasing fears about the return of high inflation.
"In the last 10 days, our daily volumes have more than doubled to 70-80kg. This is despite it being an inauspicious period to buy gold in the country," said Sanjiv Shah, executive director of Benchmark Mutual Fund, which has the largest volumes and assets under gold ETFs in India.
Domestic spot gold prices rose above Rs16,000 ($332.6) for 10g for the first time on Wednesday after international prices convincingly moved above the key $1,000per-troy-ounce level earlier this week.
The rally has come at a time when Indian consumer demand has already been at multiyear lows since the start of the year.
According to the World Gold Council, India's gold consumption fell 38% on year in the April-June quarter to just 109 tonnes. During the previous quarter, gold sales were only 17.7 tonnes, down 83% on year.
Those numbers, however, are not deterring fund houses from launching even more instruments for investors looking at gold as an option.
According to market participants, a number of Indian fund houses are planning to launch gold ETFs in the next few months.
Religare Mutual Fund and HDFC Mutual Fund have submitted proposals to the Securities and Exchange Board of India--the industry regulator--to launch new ETFs.
Six fund houses--Benchmark Asset Management Co. Pvt. Ltd, Kotak Mahindra Mutual Fund, UTI Asset Management Co., Reliance Capital Asset Management Ltd, Quantum Mutual Fund and SBI Mutual Fund--already offer gold ETFs in India.
Separately, UTI Mutual Fund, Reliance Mutual Fund, and IDFC Mutual Fund have submitted proposals to launch funds that invest in gold ETFs.
"In the last one year, Indian gold ETFs have given excellent returns, prompting major fund players to plan more launches to tap this market,"
said Kapil Gandhi, a trader with STCI Commodities.
According to data from exchanges and the Association of Mutual Funds in India, gold ETFs have given returns of around 35% in the year ended 15 September, while gains from gold futures were around 25% for the same period.
The stock market, as measured by the benchmark Bombay Stock Exchange's Sensitive Index, or Sensex, returned an even lower 23%, making gold ETFs one of the best investment choices last year.
With some analysts expecting domestic gold prices to hit Rs18,000/10g soon, more investors are expected to go in for asset reallocation and increase their investment in gold ETFs.
"Investors who had been waiting on the sidelines are now coming in and volumes have been above average in the last few days," said Arvind Chary, fund manager for Quantum Mutual Fund's gold ETF.
"Out of the total consumption of 800 tonnes of gold (annually), anecdotal evidence suggests that 200 tonnes were in coins and bars. Over a period of time, this demand will shift to gold ETFs," said Shah of Benchmark Mutual Fund.
This is expected to result in more gold buying by these fund houses. Currently, gold holdings by the six listed ETFs in India are estimated around 6 tonnes.
But some industry officials warn fund houses may be getting overly excited about the scope of the market.
"Indians still prefer to hold gold in their hands, (and that is) proving to be a deterrent to the growth of ETFs in India,"
said Ashok Minawala, former chairman of the All India Gems and Jewellery Trade Federation.
"People have started accepting the current high (prices)" as expectations are for prices to rise further. That is helping revive consumer demand, he said

http://www.livemint.com/2009/09/20204157/ETF-investors-make-up-for-miss.html?atype=tp

India lead futures likely down on firm INR

Published on 2009-09-15 09:40:29


Singapore - India September MCX lead futures likely down on firm INR, 0.8% fall in LME three-month futures. "Also, concerns that China's lead industry will be in surplus despite local government orders to shut many smelters will also weigh on prices," says STCI Commodities trader Kapil Gandhi. Other metals likely to open in range, tracking steady London markets. Lead last settled at INR102.20/kg, zinc at INR89.35/kg, aluminum at INR88.35/kg, nickel at INR811.10/kg.

India gold futures rise on global cues

Fri Sep 11, 2009 11:43am IST

MUMBAI (Reuters) - India gold futures rose on Friday as international gold bounced back above $1,000 an ounce, analysts said.

International gold rose above $1,000 on Friday as the precious metal continued to benefit from a weaker dollar amid growing risk appetite and inflation fears due to strong oil prices.

The precious metal often moves in the opposite direction to the dollar, as it is seen as an alternative to holding the U.S. currency.

Indian gold futures are not delivery-based commodities and mirror international trends.

"Potential investors see gold as hedge against weakening dollar and concern of inflation, which could take gold prices above 16K level in the short term," said Kapil Gandhi of STCI Commodities

Gold market to remain rangebound..........

With the strong bullish and positive sentiment, Gold started its day on the strong note. While everyone was eyeing the 1000 mark in the Dollar, we saw sudden selling emerging in the evening session. This led to the wiping of most of its gains and created huge volatility. In the market terms it came out as a profit taking at the higher levels. A look at the chart tells us that Gold prices are near the resistance region around 15820-16000. A decisive move above it will only push in prices into newer horizon. With the momentum indicators in the overbought zones, we may see some round of consolidations before moving higher. Hence avoid chasing the trends and look into buying into declines.

India gold futures tad down on profit booking

Published on 2009-09-09 17:11:04

Singapore - India October MCX gold contract tad down at INR15,719/10 grams, off earlier highs of INR15,814 on profit booking after recent run up in prices. However, outlook still strong as fears of inflation and weakening dollar could give momentum to rally, says Kapil Gandhi of STCI Commodities; tips contract in INR15,640-INR15,940 range for day.

India gold futures higher on overseas cues

Wed Sep 9, 2009 11:06am IST

MUMBAI (Reuters) - India gold futures were higher on Wednesday taking cues from overseas gold, which stayed above $1,000 an ounce for the second consecutive session, analysts said.

International gold prices rose on Wednesday, hovering just above $1,000 per ounce, but below the highs marked the previous day, as investors sold the dollar to buy riskier assets such as stocks and commodities.

The precious metal often moves in the opposite direction to the dollar, as it is seen as an alternative to holding the U.S. currency.

"U.S. Inflationary concern will also support the gold prices as the yellow metal is used as a hedge against the rising inflation," said Tarun Satsangi, an analyst with Bonanza Commodity Brokers Pvt Ltd.

Indian gold futures are not delivery-based commodities and mirror international trends.

"In today's session, on higher side note, we think it shall move in the range of 15,640 -15,940 level for the day," said Kapil Gandhi of STCI Commodities.

Gold up as international gold touches $1,000

Tue Sep 8, 2009 11:49am IST

(Reuters) - India gold futures were higher on Tuesday tracking overseas cues, analysts said.

U.S. gold futures hit a six-month high of $1,000 and spot gold also rose to six-month high on Tuesday as the dollar's weakness, concerns about the sustainability of the global economic recovery and worries about inflation underpinned sentiment.

Gold is considered as a safe hedge investment against economic uncertainties for investors who are averse to risk.

The precious metal often moves in the opposite direction to the dollar, as it is seen as an alternative to holding the U.S. currency.

Some market players were cautious about prices sustaining at $1,000, saying the rally had been driven by speculators and gold was an expensive buy in historical terms.

"In today's session we could see highly volatile trading in gold... expect gold to trade on higher side in range of 15,640- 15,900," said Kapil Gandhi of STCI Commodities.

Futures have topped $1,000 nine times -- three times this year and six last year, including a record $1,033.90. Spot prices have risen above $1,000 just four times - once in February and three times in March 2008, when they hit a record $1,030.80.

Indian gold futures are not delivery-based commodities and mirror international trends.


http://in.reuters.com/article/topNews/idINIndia-42294320090908?sp=true

India gold futures tad up on overseas gains

Published on 2009-09-07 13:46:15

Singapore - India October MCX gold contract tad up at INR15,742/10 grams, recovering from earlier low of INR15,690, as overseas spot gold turns positive on weak dollar. "We suggest that investors be on the buy side in gold as the upcoming festive season could improve demand slightly, and because of positive international cues," says Kapil Gandhi of STCI Commodities; tips contract in INR15,640-INR15,780 range.

India gold futures tad lower on global cues

Mon Sep 7, 2009 12:06pm IST

MUMBAI, Sept 7 (Reuters) - India gold futures were slightly lower on Monday tracking overseas cues, but analysts said worries about the global economy limited the downside.

International gold futures dipped a touch but still hovered just below $1,000 on Monday in buying linked to a weaker dollar and fears about inflation. See [ID: nT36558]

Gold is considered as a safe hedge investment against economic uncertainties for investors who are averse to risk.

The precious metal rallied last week amid prospects for falls in stock markets and worries about inflation, with central banks pumping money into their economies to help fight the global recession.

The US unemployment rate jumped to a 26-year high of 9.7 percent.

"Gold prices would be in range tracking US dollar...We expect gold to trade in range of 15,640-15,780 level for the day," said Kapil Gandhi of STCI Commodities.

The precious metal often moves in the opposite direction to the dollar, as it is seen as an alternative to holding the U.S. currency.The dollar and the yen were subdued in early trade on Monday


http://in.reuters.com/article/domesticNews/idINBOM19549620090907?pageNumber=1&virtualBrandChannel=0&sp=true

http://economictimes.indiatimes.com/Market-News/Gold-futures-tad-lower-on-global-cues/articleshow/4981137.cms

India lead futures up 3.3% at 16-month high

Published on 2009-09-04 12:54:48

Singapore - India September MCX lead futures up 3.3% at 16-month high of INR114.75/kg on supply concerns after shutdown of some Chinese lead smelters; contract earlier hit 4% upper limit. "The potential supply shortage is fueling the price rise in lead," says STCI Commodities trader Kapil Gandhi; lead prices up around 15% in past three sessions. In other metals, aluminum up 0.7% at INR90.50/kg, zinc up 2.3% at INR94.05/kg, nickel trading 0.8% higher at INR901.60/kg.

India gold futures down 0.5% on profit-taking

Published on 2009-09-04 13:24:27

Singapore - India October MCX gold contract down 0.5% at INR15,688/10 grams on profit-taking; contract up around 5% in past three sessions. "This is a good buying opportunity for new investors who haven't yet enjoyed the rally," says STCI Commodities trader Kapil Gandhi; expects contract in INR15,550-INR15,780.

India copper futures edge higher; U.S. data eyed

Thu Sep 3, 2009 4:27pm IST

MUMBAI, Sept 3 (Reuters) - India copper futures edged higher on Thursday afternoon, buoyed by a weak dollar, with traders awaiting U.S. jobs data for direction in the base metals complex, analysts said.

The most-traded November contract MCCX9 was 0.88 percent higher at 308.00 rupees per kg at 4:22 p.m., after hitting a high of 309.3 rupees earlier. The contract has shed 3.9 percent in the previous three sessions.

The euro edged higher against the dollar and yen ahead of a European Central Bank policy meeting widely expected to leave rates unchanged. [USD/]

The U.S. non-farm payrolls data, due on Friday, is expected to give leads on health of the world's largest economy. [ID:nLV55839]

"The euro has bounced back and that is supporting (copper) prices," said Priyank Upadhyay, head of research with Commtrendz Research. "It is just a corrective pull-back after days of sell-off."

"We expect copper to trade in the range of 304-312 (rupees)," said Kapil Gandhi of STCI.
The base metals complex may see further declines in the near-term as prices have far exceeded fundamentals, they added.

"We could see more bearishness in copper on weak fundamentals. If copper stays below 315/317 rupees, we expect prices to decline to 292/290 rupees," said Upadhyay.

Domestic copper, used in power and construction, has seen prices double this year on a combination of Chinese stockpiling, speculative buying and improving macro data.

In other base metals, zinc for September delivery MZIU9 was 1.46 percent higher at 90.25 rupees per kg, while September nickel MNKU9 was 1.59 percent higher at 898.40 rupees per kg

India copper futures likely up on technical buying

Published on 2009-09-03 09:39:06

Singapore - India November MCX copper futures likely higher on technical buying after last closing at INR305.30/kg, above key INR300 support. "Yesterday's late rebound is likely to keep the prices firm in the opening session. Equity and currency markets will guide the trading later in the day," says STCI Commodities trader Kapil Gandhi; tips INR304-INR312 band.

India copper futures extend losses for third day

Wed Sep 2, 2009 4:10pm IST

MUMBAI, Sept 2 (Reuters) - India copper futures fell further for a third day in a row on Wednesday, weighed by weak equity markets, which renewed doubts of an early economic recovery and demand for the industrial metal, analysts said.

The most-traded copper November contract MCCX9 was 1.62 percent lower at 300.50 rupees per kg at 4:01 p.m., after hitting a low of 298.3 rupees earlier.

The contract had shed 3.9 percent in the previous two sessions.

World stocks fell close to 1 percent after an overnight sell off on Wall Street, with both Asia and Europe rattled by concerns over the sustainability of this year's equity rally. [MKTS/GLOB]

"Copper may witness continous weakness on equity markets, we could see level 296 (rupees) during session," said Kapil Gandhi of STCI Commodities.

"A top has been posted and copper might see further downside on rising inventory and choppy stock markets. Copper might deline to 292/287/270 rupees in days to come," said Praveen Singh, an analyst with Sharekhan Commodities.

Copper stocks in the warehouses monitored by the London Metal Exchange rose by 3,000 tonnes to 302,950 tonnes on Wednesday.

Investors would be awaiting U.S. non-farm payrolls, one of the most closely watched indicators, due later this week, for signs the improving macro-economic picture.

Copper, used in power and construction, has seen prices double this year, as a combination of Chinese stockpiling, speculative buying and improving macro data boosted prices.

In other base metals, zinc for September delivery MZIU9 was 1.01 percent lower at 88.50 rupees per kg, while lead for September delivery MLDU9 was 0.64 percent lower at 101.05 rupees per kg