Group Name: Hedge of Glory

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Chinese gold buying picks up after holiday;

Indian premiums rise
Writer: A. Ananthalakshmi in Singapore and Meenakshi Sharma in Mumbai
Date: Friday, 10 October 2014, 5:00pm
Source link: http://in.reuters.com/article/2014/10/10/gold-demand-asiaidINKCN0HZ0TD20141010
Summary:
As a step towards opening Chinas gold market, China launched an international gold
exchange. Just recently, buying interest increased during the week-long national holiday last
Oct 1-7, 2014 in China. This causes restocking and thus, boosting demand. Moreover, demand
of gold has been increasing in India due to festival and wedding season. India will celebrate the
festivals of Dhanteras and Diwali this month.
Effect on Gold Price over Evaluation Period:
Direction

Up

Explanation

Aggressive promotions and drop in gold prices by jewellery retailers in

China helped boost sales in the country during their Golden Week holiday.
With that, retailers tend to restock their supplies now and import so much
gold, thereby increasing the demand for the said commodity. In addition,
as Indias festivals of Dhanteras and Diwali as well as their wedding
season approaches, market expects strong purchases because gold
plays an important role in these events. As a result of the foreseen
increase in demand by the golds top two consumers, the price of the said
metal will then be pushed upwards.

Group Name: Hedge of Glory

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WTI Oil Extends Bear Market Tumble on Global

Glut
Writer: Mark Shenk
Date: Friday, 10 October 2014
Source link: http://www.bloomberg.com/news/2014-10-10/wti-oil-extends-bear-market-tumbleon-global-glut.html
Summary:
West Texas Intermediate crude and Brent, two of the most-traded crude futures, are collapsing
because demand growth is slowing at the time when supply is improving due to the increase in
output from U.S., Russia, and Libya. The WTI for November delivery touched the $83.59, the
lowest level since July 3, 2012 and, in effect, doubled the volume of all futures traded. The
Organization for Petroleum Exporting Countries (OPEC) also increased its output by 402,000 in
September and predicted that demand will accelerate in the next few months. Additionally,
Saudi Arabia and Iran, both OPEC members, are discounting their oil prices in Asian markets,
prompting speculation that members are competing for market share.

Effect on Gold Price over Evaluation Period:

Direction

Down

Explanation

Slower demand growth at a time when supply base is growing (US and
Russia), coupled with a steady return of output from Libya, bring the price
of oil down to a new low. Saudi Arabia and Irans discounting of their oil
prices to Asian markets also bring overall prices down as other OPEC
members are expected to follow suit due to competition for market share.
Lower oil prices tend to have a deflationary effect on the economy,
lending strength to dollar and bringing the price of commodities such as
gold down as well. Also, historic trend shows positive correlation between
oil and gold--making oil price trends predictive of that of gold.

Gold Price Rally Peters Out, Dollar Strength

Returns - Bullion Morning
Writer: Ian Walker
Date: Friday, 10 October 2014

Group Name: Hedge of Glory

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Source link: http://www.bulliondesk.com/gold-news/bullion-morning-gold-price-rally-peters-outdollar-strength-returns-83176/
Summary:
ECB president Mario Draghis speech on structural reform and the importance of stricter fiscal
policy in the eurozone was followed by dollar recovery against euro as the gold spot price
declined by $6. This is despite the previous dovish growth prospects from the US Federal
Reserve that weakened the dollar earlier this week. Considering an IMF report of euro having a
40% chance of falling back into recession, Draghi noted that reform is needed for recovery.
Market uncertainty continues despite strong dollar pushing the currency and stock market.
Effect on Gold Price over Evaluation Period:
Direction

Down

Explanation

Mario Draghis call for structural reform pressured the euro to lose some
ground against the dollar. The sink in the said currency somehow pushed
the Dollar Index to recover from a three-week low and regain its strength
against a broad basket of currencies. This means that trading a
commodity denominated in dollars became more expensive for other
currencies. In effect, the rebound in the dollar price of gold influences the
demand for the commodity to decline. As a result of such, the price of
gold will effectively go down.

Overall Position
Forecast over the evaluation period: Down
Given our analyses above, we believe that gold prices will continue to fall over the next couple
of days. Despite the potential increase in the gold price caused by increased demand in China
and India, several other factors are expected to more than offset this increase. As the Fed
intends to end quantitative easing and has expressed higher projections for interest rates in the
near future, U.S. Treasury yields have risen, and the equity market has also strengthened. On
the other hand, weakening currencies (e.g. yen and euro) and the slight slump in oil prices
further add strength to the dollar, making gold more expensive in the currencies of other

Group Name: Hedge of Glory

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nations, which in turn can hurt the demand for gold and effectively drive its price down.