Fluctuation of Gold Price

read and f both in rewards to me ABSTRACT flamboyant is a brilliant yellow precious metal that is resistant to air and corrosion. G quondam(a) comes bet on after desire deposits when it comes to the preference for enthronization in India and considered a nest egg and enthronement vehicle. India is the existences largest consumer of amber in jewellery as an investing. bills is contendd in the form of securities on stock central blush when the deluxe outlays atomic yield 18 high in that respect is steel boom in the commodities moneymaking(prenominal)ize of atomic number 79en hence the main(prenominal) character and the need of the champaign be to go to sleep the coronation pattern in cash and to outwit the risk The data which is purposed in the dissect is secondary data. The compendium has been done by using the technical tools Relative Strength advocator (RSI), MACD. From the analysis it can be concluded that silver as an enthronisation avenue has profitd. There goodr foodstuff for atomic number 79 and a person with atomic amount can trade in lucky.RSI can be considered as the best tool to evaluate the wrong movement of favourable. The investors have to march on a keen watch on the cost of metal(prenominal) and since on that point is an upward momentum in the price of deluxe it is time for the investor to move CONTENT CHAPTER PARTICULAR PAGE NO NO. 1. INTRODUCTION accept FOR THE STUDY OBJECTIVE OF THE STUDY SCOPE OF THE STUDY RESEARCH methodological analysis LIMITATIONS 2. follow OF LITERATURE TABLES AND GRAPH 3. COMPANY PROFILE 4. information summary & INTERPRETAIONS 5. FINDING CONCLUSION RECOMMENDATIONS 6. BIBLIOGRAPHY CHAPTER NO 1 INTRODUCTION INTRODUCTION roughly Indian COMMODITY mart trade good future avocation is an old concept and flourished in the late nineteenth century. There were several much(prenominal) commutat ions that traded in specific commodities in certain geographies. In the 1960s the futures merchandise ran into trouble as high inflation resulted from a series of wars and droughts in the country which lead to considerable speculation and save of awkward commodities.Ever since the rectify of civilization good work has become an integral p fine art in the life of man smorgasbord. The very reason for this lies in the fact that commodities represent the thoroughgoing utility of human creation. Commodity grocerys ar market where raw or primary products be supercede. These raw commodities argon traded regulated trade good transform they atomic number 18 bought and sell in standardize commence that may whatsoever movable property former(a) them actionable claims, money and securities. This goodness market is becoming day by day the best for the increasing economy. coin is cherished in India as saving and enthronization vehicle and is the second best-loved investment a fter depose deposit. India is pieces largest consumer of property jeweller and in investment. meretricious is traded in the form of securities on stock exchange. In the cities gold is facing competition from the stock market and a long range of consumer goods. Domestic breathing in is dictated by monsoon, harvest and trades union season. Indian jewellery mop up take is sensitive to price increases and however more(prenominal) than so to the irritability.For geezerhood, portfolio managers have recommended a minimum of 10% to 20% of ones derive net worth in gold as a hedge against inflation or as a safety net in the event that our paper money dodge collapses. Hence the study is al approximately the commodities market in gold. Every commodity has its own price, and varies crossways markets even at the point of first sale, i. e. the sell market. There is of course anformer(a) very active financial market, which has a price that is widely traded, i. e. the stock market. Here shares of companies are traded by investors at prices which are determined by multitude of perceptions. NEED FOR THE STUDY- ? Since there is a cut throat competition in the present world market There is a need to study about factors touch gold prices ? Even when the gold prices are high there is in time boom in the commodities market of gold hence the main purpose and the need of the study are to know the investment patterns in gold and to hedge the risk OBJECTIVE OF THE STUDY- 1. To know how gold is traded 2. To know the magnetic variation of gold prices 3. To know the factors affecting gold prices 4. To evaluate the burn analysis of gold . To study the impact of gold on investors methodology The data which is apply secondary in a nature. SECONDARY DATA- ? From conglomerate test books, journals, magazines, news papers and booklets from company. ? Information collected from dis similar websites kindreds atomic number 79 World, MCX etc. SCOPE OF THE STUDY- ? The scop e of the study is about the day to day changes in the price of gold and the reasons behind the change. ? It focuses more on the variants and the inte bide of investors to invest in gold even though the price is desexualizeting higher. The study also focuses more on the fluctuation in the gold and its relation to pet spotum markets oil and gold are the two main items in the economy now that tends to increase day by day. LIMITATIONS- ? Difficulty in getting the lives prices of gold in absence seizure of online research software. ? Use of expressage technical tools. ? Commodity trading is limited to gold except. ? There may be factor early(a) than those examine in this research which may impact on gold prices. ? The study is limited besides for a certain period of time i. e. April to June 2012 CHAPTER-2 REVIEW OF LITERATURE TRADING OF luxurious IN COMMODITY MARKETS COMMODITY MARKETCommodity markets are markets where raw or primary product these raw commodities are traded on regu lated commodities commuting in which they are brought and sold in interchangeable contract it c each over bodily product markets but non ship canal that services including those of government, nor investment debt, can be seen as a commodity A commodity trading is sophisticated form of investing it is similar to stock trading but instead of buying and selling shares of companies, an investor buys and sells commodities likes stocks, commodities are traded on exchange where buyers and sellers can work in concert to either get product they need or to make a profit from the fluctuation prices. There are few ways to trade commodities. Futures are spying to buy or sell commodities at specific date. An option is the near to buy or sell a commodity at a specific price and date. COMMODITY TRADING Trading futures is the purest way to invest in commodities. To trade commodities, an individual trading account can be opened either directly with a futures commission merchant or indirectly t hrough with(predicate) as introducing broker.Another way to trade commodities is through a managed account, where you give someone written power of attorney to make and break away decisions about what and when to trade. He or she will have discretionary office to buy or sell for your account or will contract you for approval to make trades, or you can hire a commodity trading advisor for a fee. And lastly, ever increasingly popular methods of diversify investing in commodities include commodity pools (limited partnerships) or commodity tie in mutual funds. In all futures markets, trading decision are do in two ways Fundamental or Technical, although many traders use a combination of both.Fundamental analysis includes all factors that function confer and conduct. For the physical commodities markets, fundamental factors include weather and geopolitical events in producing countries outside forces that influence price action. For the financial futures markets, factors such a s Federal Reserve actions and frugal reports are among fundamental forces affecting prices. Technical analysis is based strictly on inside market forces. It involves tracking various price patterns that occurred in the markets in the past. Analysts focus on a variety of time frames, and trading decisions are based on past tendencies with the idea these price patterns tends to buy up themselves.Technical analysis involves a wide range of techniques, and a variety of market indicators are studied including volume, open avocation, and momentum. Each individual analyst has his best-loved approach technical analysis is just as much art as it is science. REGULATOR OF COMMODITY MARKET THE DIFFERENT PRODUCT IN COMMODITY MARKET ARE USE 1. Precious metal 6. Plantations 2. bandstand metal 7. Spice 3. Pulses 8. Sugar 4. Cereals 9. potato 5. Energies Introduction metal(prenominal) grand is a unique plus based on few base characteristics. First, it is primarily a monetary asset, and p artly a commodity.As much as two third gears of golds total accumulated holdings restore to barge in of value considerations. Holdings in this category include the central bank militia, hidden investments, and high-cartage jewelry bought primarily in developing countries as a vehicle for savings. Thus, gold is primarily a monetary asset. Less than one third of golds total accumulated holdings can be considered a commodity, the jewelry bought in Western markets for adornment, and gold used in sedulousness. The greenback in the midst of gold and commodities is important. Gold has maintained its value in after-inflation price over the long run, while commodities have declined. Some analysts like to estimate of gold as a currency without a country.It is an inter contently recognized asset that is not dependent upon any governments predict to pay. This is an important feature when comparing gold to conventional diversifiers like T-bills or bonds, which unlike gold, do have co unter-party risk History of gold in India Prior to 1962, India was the worlds largest gold market and the main trading center was Bombay. In 1962, the government enacted the Gold Contract Act, which out(p) the citizens of India from holding pure gold bars and coins referable to loss of reserves during the indo-china war. It was declared that the old holdings in pure gold bars to be compulsorily converted into jewelry. Pure gold bars and coins were to be dealt only by licensed dealers.A large unofficial market sprung up which dealt in cash only as a consequence of this legislation that adversely affected the official gold market. This also made way for export and bare marketing, which comprised of many jewelers and bullion traders. In 1990, India was on a wand of default of external liabilities as it had a study orthogonal exchange problem. It had to give up the concept of check up onling and licensing as it led to nought more than corruption and shortages. As a result, the India government pledged 40 tones from their gold reserves with the bank of England. India had to adopt the concept of liberalization. The government abolished the 1962 Gold control Act in 1992 and liberalized the import of gold in India for a duty payment of Rs. 250per 10 grams.The government made up for the foreign exchange problem by allowing free imports and earning the taxes. This step expanded the gold market and it also waved off the unofficial trade i. e. smuggling and black marketing. This makes India the most price-sensitive market for gold in the world. Gold in Indian present scenario Gold is valued in India as a savings and investment vehicle and is the second preferred investment behind bank deposits. India is the worlds largest consumer of gold in jewelry (much of which is purchased as investment). The lay away tendency is well ingrained in Indian society, not to the lowest degree because inheritance laws in the middle of the twentieth century lent a great desirabili ty to anonymity.Indian people are renowned for saving for the future and the financial savings ratio is strong, with a ratio of financial assets-to-GDP of 93%. Golds circulates within the system and roughly 30% of gold jewelry fabrication is from recycled pieces. India is typically also the largest purchaser of coins and bars for investment (80tpa), although last year it had to concede first place to Japan in the wake of the heavy buying in the first quarter cod to fears for the stability of the Japanese banking system. In 1998-2001 inclusive, annual Indian demand for gold in jewelry exceeded 600 tons in 2002, however, referable to rising and vapourisable prices and a poor monsoon season, this dropped back to 490 tons, and coin and bar demand dropped to 67 tons.Indian jewelry off take is sensitive to price increases and even more so to volatility, although this decline in tonnage since 1998 is also due in part to increasing competition from white and brown Goods and alternative i nvestment vehicles, but is also a mullion of the increase in price. The Indian brides Streedhan, the Wealth she takes with her when she marries and which remains hers, is still gold, however (thus giving gold an important role in the empowerment of women in India). The distinction between gold and commodities is important. Gold has maintained its value in after-inflation terms over the long run, while commodities have declined. Some analysts like to think of gold as a currency without a country.It is an internationally recognized asset that is not dependent upon any governments promise to pay. This is an important feature when comparing gold to conventional diversifiers like T-bills or bonds, which unlike gold, do have counter-party risk. SIGNIFICANCE OF GOLD IN INDIAN CULTURE Gold is a precious metal with which man kind has had a long and very intimate relation. Gold is considered as a emblem of purity and good fortune. Most of the gold that the entire world holds lies in India. The main reasons why Indians consider gold as an investment are. ? Gold is considered as equivalent to liquid cash gold is considered as a security or assets which can be converted in to cash when ever required. Gold is very good investment due to consistently increasing value, gold is considered as safe and secure investment ? Gold is a goof gift item it is precious and seemly it is again as gift during wedding birthdays or any other special occasions. It is symbol of prestige and is considered auspicious ? Gold considered as spatial relation symbol Gold is symbolizes wealth. in Indian the weddings, the bride wears jewellary as a symbol of the family status. ? Gold has religious significance Gold is a symbol of Hindoo goddess lakshmi. Gold is bought or gifted on occasions of festivals like Dhanteras Dussera and diwali . ? Gold has great ornamental value women and gold jewellery are essential from each other.Gold ornaments area always in fashion and will never become out of fas hion . even the wedding rings are made of gold to mark a long lasting blood ? Gold Ancentral property Gold is passed down from generation to generation as an ancestral property. .Gold producing countries southwestern Africa unite states Australia China Canada Russia Indonesia Peru Uzbekistan Papua new guinea gold coast Brazil Chile Philippines Mali Mexico Argentina Kyrgyz tan Zimbabwe Colombia The largest maker of Gold is South Africa. It accounts for an estimated 16. 5 million ounces of Gold annually in the next 3 year and produces almost 20 part of the worlds bullion.Hopping to control its declining return trend due to the extended weakness in the price of Gold in recent years. The South African Gold industry is working in the direction to lower its product costs and hike up productiveness. The second largest producer of gold is united states. It accounts for an estimated 10. 4 million ounces of Gold annually by 2001 and produces about 12. 5% of the wo rld Gold supply referable to the expansion US Mining operations. And because of the reduced profitability due to the low price of Gold. Reduction in mine production is judge by 9% by the US during the next 3 years the third largest producer of gold is Australia with an estimated 9. 6 million ounces annual production by 2001.Nearly 45% of the world gold supply was produced by the teetotum 3 producing nations Latin America (Mexico, Peru, Chile and Brazil) and the Far East producer are accepted to increases production in the next three years. though these countries add up to a very a small shares in the worlds totally supply there production increase will counter act some of the production cuts made up by the top 3 big producers Current Scenario in Indian Commodity Market Need of commodity derivatives for India India is among top 5 producers of most of the commodities, in addition to being a major consumer of bullion and zippo products. land contributes about 22% GDP of Indian eco nomy. It employees near 57% of the labor force on total of 163 million hectors of land Agriculture sector is an important factor in achieving a GDP crop of 8-10%. All this indicates hat Indian can be promoted as a major centre for trading of commodity derivatives. INDIAN COMMODITY MARKET TRADING AND EXHANGES ? MCX MULTI COMMODITY EXHANGE ? NCDEX subject COMMODITY AND DERIVATIES EXHANGE ? NSEL NATIONAL SPOT EXHANGE LTD ? NMCE NATIONAL METAL AND COMMISSION EXHANGE MULTI COMMODITY EXCHANGE MCX Multi commodity exchange is a commodity exchange based in Mumbai, the financial capital of India. The MCX is a demutualized electronic multi commodity futures exchange, and enables future trading of various agricultural and non agricultural commodities such as Metals, Pulses, Oils, Fiber, Energy, Petrochemicals, Plantations, Cereals, Bullion and Spices etc.As on 31st of December 2007, the exchange was offering futures trading in 55 different commodities. Established in November 2003 by Financ ial Technologies, the MCX hold a perpetual cognizance issued by government of India. Pattern on multi commodity exchange (MCX) MCX is currently largest commodity exchange in the country in terms of trade volumes, notwithstanding it has even become the third largest in bullion and second largest in silver future trading in the world. Coming to trade pattern, though there are about 100 commodities trade on MCX, only 3 or 4 commodities contribute for more than 80 percent of total trade volume. As per recent data the for the most part trade commodities are Gold, Silver, Energy and base Metals.Incidentally the futures trends of these commodities are mainly impelled by international futures prices rather than the changes in domestic demand-supply and hence, the price signals largely reflect international scenario. Among agriculture commodities major volume contributors include Gur, Urad, Mentha oil etc. whose market sizings are considerably small making accordingly vulnerable to man ipulations. NATIONAL COMMODITY AND DERIVATIVES EXCHANGE LTD NCDEX The second largest commodity exchange in the country after MCX. However the major volume contributors on NCDEX are agricultural commodity but most of them have gross inherent problem of small market size, which is making them vulnerable to market manipulations and over speculation.About 60% trade on NCDEX comes from guar seed, chana and urad (narrow commodities as down the stairstake by FMC). theme Commodity and Derivatives commutation Ltd (NCDEX) is a technology driven commodity exchange. It is a public limited company registered under the Companies Act, 1956 with the file of companies, Maharashtra in Mumbai on April 23, 2003. it has an independent Board of Directors and professionals not having any vested in commodity market. It has been launched to provide a world-class commodity exchange program for market participants to trade in a wide spectrum of commodity derivatives driven by best global practices, pr ofessionalism and transparency.In December 2003, the National Commodity and Derivatives transfer Ltd (NCDEX) launched futures trading in nine major commodities. To begin with contracts in Gold, Silver, Cotton, soybean plant bean, Soya oil, Rape/ Mustard seed, Rapeseed oil, Crude palm, and RBD palmolein are being offered. National Multi Commodity Exchange (NMCE) NMCE is third national level futures exchange that has been largely trading in agricultural commodities. Trade on NMCE had considerable balance wheel of commodities with big market size as jute rubber etc. But, in subsequent period, the pattern has changed and slowly moved towards commodities with small market size or narrow commodities.Analysis of volume contributions on three major national commodity exchanges reveled the following pattern, major volume contributors. Majority of trade has been concentrated in few commodities that are ? Non Agricultural Commodities ( bullion, metals and energy) ? Agricultural commodities with small market size ( or narrow commodities) like guar, urad, menthe etc The commodity markets are being classified as following types of commodities. 1. Agricultural products. 2. Precious metals. 3. Other metals. 4. Energy. customary CHARACTERISTICS OF GOLD ? Gold is primarily a monetary asset and partly a commodity. ? More than two-thirds of golds total accumulated holdings relate to value for investment with central bank reserves, private players and high-carat jewellery. Less than three of golds total accumulated holdings is a commodity for jewellery in western markets and usage in industry. CHARACTERISTICS OF GOLD MARKET ? Gold market is highly liquid and gold held by central banks and other major institutions and retail jewellery keep coming back to the market. ? Due to large stocks of gold as against its demand, it is argued that the core driver of the real price of gold is stock equilibrium rather than flow equilibrium. ? hard-hitting Portfolio Diversifier this enoun ce summarizes the usefulness of gold in terms of Modern Portfolio Theory, a strategy which is utilized by many investment managers today. Using this approach, gold can be used as portfolio diversifier to improve investment performance. Effective Diversification During Stress Periods Traditional methods of portfolio diversification often fail when they are most needed-that is, during periods of financial stress(instability). On these occasions, the correlations and volatilities of return for most asset classes(including traditional diversifiers such as bonds and alternative assets)increase, thus reducing the think cushioning effect of diversified portfolio. INDIAN GOLD MARKET ? Gold is valued in India as savings and investment vehicle and is the second preferred investment after bank deposits. ? India is the worlds largest consumer of gold in jewellery and in investment. In July 1997 the RBI authorized the commercial banks to import gold for sale or loan to jewellers and exporters. ? The gold hoarding tendency is well ingrained in Indian society. ? Domestic consumption is dictated by monsoon, harvest and marriage season. Indian jewellery off take is sensitive to price increases and even more so to the volatility. ? In the cities gold is facing competition from the stock market and a wide range of consumer goods. ? Facilities for refining, assaying, making them into standard bars in India, as compared to the rest of the world, are insignificant, both qualitatively and quantitatively. GOLD MARKET MOVING FACTORS ? above ground supply from sales by central banks, reclaimed start and official gold loans. Producer/miner hedging interest. ? World macro economic factors-US Dollar, interest rate. ? Comparative returns on stock markets. ? Domestic demand based on monsoon and agricultural output. IMPORTANT WORLD GOLD MARKETS ? capital of the unite Kingdom is the biggest as well as the oldest gold market in the world. ? Mumbai under Indias liberalized gold regime. ? i nnovative York as the home of futures trading. ? Zurich as a physical turntable. ? Istanbul, Dubai, Singapore and Hong Kong as doorways to important consuming regions. ? capital of Japan was TOCOM sets the snappishness of Japan. Headquartered in Mumbai, Multi Commodity Exchange of India Ltd (MCX) is a state-of-the-art electronic commodity futures exchange.The demutualised Exchange set up by Financial Technologies (India) Ltd (FTIL) has permanent recognition from the Government of India to facilitate online trading, and clearing and settlement operations for commodity futures across the country. Having started operations in November 2003, today, MCX holds a market share of over 80% of the Indian commodity futures market, and has more than 2000 registered members operating through over 100,000 trader work stations, across India. The Exchange has also emerged as the sixth largest and amongst the meteoric growing commodity futures exchange in the world, in terms of the number of contr acts traded in of the number of contracts traded in 2009. MCX offers more than 40 commodities across various segments such as bullion, ferrous and non-ferrous metals, and a number of agric-commodities on its platform.The Exchange is the worlds largest exchange in Silver, the second largest in Gold, Copper and Natural grease-gun and the third largest in Crude Oil futures, with respect to the number of futures contracts traded. The Exchange strives to be at the forefront of developments in the commodities futures industry and has forged strategic alliances with various leading International Exchanges, including Euro next-LIFFE, London Metal Exchange (LME), novel York Mercantile Exchange, Shanghai Futures Exchange (SHFE), Sydney Futures Exchange, The Agricultural Futures Exchange of Thailand (AFET), among others. For MCX, staying connected to the basic is imperative.Its domestic alliances aid in improving ethical standards and providing services and facilities for superior general improvement of the commodity futures market. EXCHANGE-TRADED GOLD GOLD-BACKED SECURITIES Gold is traded in the form of securities on stock exchange in Australia. France, Hong Kong, Japan, Mexico, Singapore, South Africa, Switzerland, Turkey, the United Kingdom and the United States. By design, these forms of securitized gold investment, all regulated financial products, are largely referred to as Exchange Traded Commodities or Exchange Traded Funds (ETFs), and are judge to track the gold price almost perfectly. Unlike derivative products, the securities are 100% backed by physical gold held mainly in allocation form.These securities have had a major impact on the gold market, representing an annual average of 32% of identifiable investment and 6. 5% of total physical demand over the 5 years to 2008. Financial advisors and other investment professionals can provide further details about these products. FUTURES AND OPTIONS GOLD FUTURES Gold futures contracts are firm commitments to make or take sales talk of a specify quantity and purity of gold on a prescribed date at an agreed price. The sign margin or cash deposit paid to the broker is only a split up of the price of the gold underlying the contract. That means investors can achieve ideational ownership of a value of gold considerably greater than their initial cash outlay.While this leverage can be the key to significant trading profits, it can also give rise to equally significant losses in the event of an adverse movement in the gold price. Futures prices are determined by the markets perception of what the carrying costs including the interest cost of borrowing gold plus insurance and storage charges -ought to be at any one time. The futures price is usually higher than the site price for gold. Futures contracts are traded on regulated commodity exchanges. The largest are the New York Mercantile Exchange Comex Division (recently rebranded CME Globex, after a merger between Chicago Mercantile Exchange and NYMEX), the Chicago Board of Trade (part of CME) and the Tokyo Commodity Exchange. Gold futures are also traded in India a Dubai.The Commodity Futures Trading commission provides extensive reports on derivatives trading in the United States. Tradable commodity indices are based on fully collateralized baskets of long-only commodity futures, all of which include a small allocation to gold. GOLD OPTIONS These give the carrier the right, but not the obligation, to buy (call option) or sell (put option) a specified quantity of gold at a predetermined price by an agreed date. The cost of such an option depends on the current discolouration price of gold, the level of the pre-agreed price (the glisten price), interest rank, the anticipated volatility of the gold price and the period remaining until the agreed date.The higher the strike price, the less expensive a call option and the more expensive a put option. Like futures contracts, buying gold options can give the hold er substantial leverage. Where the strike price is not achieved, there is no point in exercising the option and the holders loss is limited to the grant initially paid for the option. Like shares, both futures and options can be traded through brokers. Gold price Fluctuation Responsible factors Gold has widely used throughout the world as a vehicle of monetary exchange, as an investment, use in jewelry, medicine, the food and drink also. Gold provided the independent of states, currencies, productivity and credit worthiness.Many experts advice to the private investors that they do 5 to 10 % their investment in the gold because regular purchase of gold and silver coins helps to protect the smaller investor against price and currency fluctuation. Gold has always been prized as precious and valuable. It does not deteriorate. Gold is also maintained the liquidity in our portfolio because gold is traded around the world. With gold we can possess the international currency which we can sold around the world at any time. This table shows the gold price fluctuation. pic Table shows the gold price fluctuation In the recent scenario there are various issues and factor responsible for the gold price fluctuation. increase deficit in the balance of trade in the united states. ? The declining production of some gold producing countries the major gold producing company Africa, Canada, Australia, china, Philippines. ? Central bank and international monetary fund also play the major role in gold fluctuation. It is generally accepted that interest are well related to the gold price. As the interest rate rise the general tendency is for the gold price, which earn no interest to fall and rates dip for gold price to rise. ? At the end of 2008 financial crisis captured all the global market, a trend start to develop of regular investor allocating a certain amount of their portfolio into gold.The most popular reason to own gold is as hedge against the inflation. ? From late 2009 Fears of Sovereign debt crises developed among the investors as a result rising the private and government debt levels around the world together with the wave of downgrading of government debt in some European states. The crises have major impact on several European countries, most notably on Greece, Ireland, Italy, Portugal and Spain. Several other factors which are responsible to pushes the gold prices upward political unrest and war monetary expansion, economic misbalance because of these reasons people lose their credence in the value of their currency and they invest into the gold as permanent or a fixed assets. pic