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Weekly

Commodity Research Report: Metals and Energy Weekly Report

Fed Chairman Ben Bernanke said economic activity has been expanding at a moderate pace. Labor market conditions have shown improvement in recent months, but the unemployment rate remains elevated....
24 Jun 2013 | 06:30 AM

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Highlights:

  • Fed Chairman Ben Bernanke said economic activity has been expanding at a moderate pace. Labor market conditions have shown improvement in recent months, but the unemployment rate remains elevated.
  • To support a stronger economic recovery and to help ensure that inflation, over time, is at the rate most consistent with its dual mandate, the Committee decided to continue purchasing additional agency mortgage-backed securities at a pace of $40 billion per month and longer-term Treasury securities at a pace of $45 billion per month.
  • Further he said, the Committee is prepared to increase or reduce the pace of its purchases to maintain appropriate policy accommodation as the outlook for the labor market or inflation changes.
  • Indian rupee witnessed a sell-off in the previous week against the US dollar and weakened to a record low level of 59.973, posting a loss of close to 3 percent.
  • RBI in its June mid quarter monetary policy review left its key policy (repo) rate unchanged at 7.25 percent in line with expectation. Cash reserve ratio (CRR) remained at 4 percent.
  • Initial jobless claims, a proxy for layoffs, increased by 18,000 to a seasonally adjusted 354,000 in the week ended June 15, the Labor Department said.
  • Data from the Energy Information Administration said crude oil inventories in the U.S. rose 300,000 barrels to 394.1 million barrels for the week ended Friday. Gasoline stockpiles rose 200,000 barrels, while stocks of distillates, comprising heating oil and diesel, fell by 500,000 barrels.
  • The Energy Information Administration said gas storage rose by 91 billion cubic feet last week.
 
Week ahead: Gold (Sell)

  • Fed Chairman Ben Bernanke said that the U.S. economy is expanding strongly enough for the central bank to begin slowing the pace of its bond-buying stimulus later this year. This may keep gold prices under pressure.
  • Strength in dollar against a basket of currencies may also cap prices of commodities in short term.
  • Rupee’s plunge may halt for a while as RBI has probably intervened in the forex markets. This may curtail gold’s upside movement as falling rupee has been supportive of surge in gold’s prices at domestic bourses in past few months.
  • Bullion holdings backing the world's biggest gold exchange traded fund SPDR Gold Trust dropped below 1000 tonnes for the first time since February 2009 last week. The GLD has seen outflows equivalent to 26% of the gold it held at the start of year.
 
 
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