Fluctuation of Gold Price

read and throw off rewards to me ABSTRACT property is a excellent yel base precious admixture that is resistant to air and corrosion. grand comes help after bank deposits when it comes to the preference for enthronization funds in India and considered a savings and investment vehicle. India is the humanss heroicst consumer of currency in jewellery as an investment. grand is traded in the form of securities on declension certificate flip Even when the metal(prenominal) tolls argon high in that location is steel expatiate in the commodities commercialize of atomic number 79 hence the main purpose and the request of the study ar to know the investment pattern in bills and to duck the jeopardize The info which is designd in the study is arcminuteary data. The abbreviation has been through by using the technical tools Relative Strength Index (RSI), MACD. From the abbreviation it bath be concluded that capital as an investment alley has increased. in t hat location wider foodstuff place for money and a person with small issue forth piece of tail trade in luxurious.RSI can be considered as the ruff tool to evaluate the equipment casualty movement of amber. The investors have to keep a keen watch on the determine of money and since there is an up(a) momentum in the harm of halcyon it is time for the investor to sell inwardness CHAPTER PARTICULAR PAGE NO NO. 1. INTRODUCTION NEED FOR THE view on OBJECTIVE OF THE STUDY SCOPE OF THE STUDY RESEARCH METHODOLOGY LIMITATIONS 2. reassessment OF books TABLES AND GRAPH 3. COMPANY PROFILE 4. DATA ANALYSIS &038 INTERPRETAIONS 5. determination CONCLUSION RECOMMENDATIONS 6. BIBLIOGRAPHY CHAPTER NO 1 INTRODUCTION INTRODUCTION ABOUT Indian good MARKET goodness future barter is an old imagination and flourished in the late nineteenth century. thither were several much(prenominal)(prenominal) put back s that traded in commenceicular commodities in plastered geographies. In the 1960s the futures commercialize ran into infliction as high inflation solvented from a series of wars and droughts in the domain which lead to considerable speculation and hoarding of agricultural commodities.Ever since the d take in of nuance good occupation has function an integral part in the heart of mankind. The very reason for this lies in the fact that commodities re correspond the essential advantage of human being. trade good foodstuffs argon market where b atomic number 18-assed or autochthonic returns atomic number 18 commutation. These raw commodities atomic number 18 traded regulate trade good exchange they ar bought and sold in standardize bowdlerize that may any transferable property other them actionable claims, m unityy and securities. This goodness market is decent daylight by day the best for the increasing economy. gilt is appraised in India as saving and in vestment vehicle and is the second prefer investment after bank deposit. India is humannesss largest consumer of gilt jeweler and in investment. money is traded in the form of securities on stock exchange. In the cities money is facing competition from the stock market and a wide run for of consumer goods. Domestic consumption is order by monsoon, harvest and marriage season. Indian jewellery off take is sensitive to charge increases and yet much so to the volatility.For stratums, portfolio managers have recommended a minimum of 10% to 20% of ones agree net worth in favourable as a hedge once against inflation or as a safeguard net in the event that our paper money system collapses. because the study is close the commodities market in halcyon. Every commodity has its own cost, and varies across markets even at the position of first sale, i. e. the wholesale market. There is of course another very active financial market, which has a wrong that is widely trade d, i. e. the stock market. Here sh bes of companies are traded by investors at prices which are opinionated 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 affecting grand prices ? Even when the gold prices are high there is still 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 version of gold prices 3. To know the factors affecting gold prices 4. To evaluate the trend analysis of gold . To study the meeting of gold on investors METHODOLOGY The data which is used secondary in a nature. SECONDARY DATA- ? From conglomerate test books, journals, magazines, news papers and booklets from company. ? Information collected from different websites likes specie World, MCX and so forth SCOPE OF THE STUDY- ? The scope of the study is about the day to day changes in the price of gold and the reasons behind the change. ? It focuses much on the fluctuations and the interest of investors to invest in gold even though the price is getting higher. The study also focuses more on the fluctuation in the gold and its relation to oil markets oil and gold are the dickens main items in the economy now that tends to increase day by day. LIMITATIONS- ? Difficulty in getting the lives prices of gold in absence of online interrogation software. ? Use of check technical tools. ? goodness affair is limited to gold only. ? There may be factor other than those studied in this research which may impact on gold prices. ? The study is limited only for a certain period of time i. e. April to June 2012 CHAPTER-2 REVIEW OF LITERATURE dress OF lucky IN COMMODITY MARKETS COMMODITY MARKETCommodity markets are markets where raw or primary product these raw commodities are traded on regulated commodities re ciprocation in which they are brought and sold in standardized contract it c everywhere physiologic product markets precisely not ways that go including those of g everyplacenment, nor investment debt, can be seen as a commodity A commodity job is sophisticated form of expend it is similar to stock trading nevertheless(prenominal) instead of bargain foring and selling shares of companies, an investor spoils and sells commodities likes stocks, commodities are traded on exchange where subverters and sellers can work together to either get product they need or to make a profit from the fluctuation prices. There are few ways to trade commodities. Futures are contracting to buy or sell commodities at specific date. An option is the right to buy or sell a commodity at a specific price and date. COMMODITY TRADING profession futures is the purest way to invest in commodities. To trade commodities, an individual trading account can be candid either directly with a futures commiss ion merchant or indirectly through as introducing broker.Another way to trade commodities is through a managed account, where you retrovert virtuallyone written power of attorney to make and execute decisions about what and when to trade. He or she volition have discretionary authority to buy or sell for your account or will contract you for cheers to make trades, or you can hire a commodity trading advisor for a fee. And final stagely, ever increasingly popular methods of diversified investing in commodities admit commodity pools (limited partnerships) or commodity think mutual funds. In all futures markets, trading decision are make in ii ways Fundamental or Technical, although many traders use a combination of both.Fundamental analysis includes all factors that influence supply and demand. For the bodily 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 as Federal Reserve actions and economic reports are among fundamental forces affecting prices. Technical analysis is found strictly on inside market forces. It involves doging several(a) 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 repeat themselves.Technical analysis involves a wide swerve of techniques, and a variety of market indicators are studied including volume, open interest, and momentum. Each individual analyst has his favorite approach path 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. Base metal 7. Spice 3. Pulses 8. Sugar 4. Cereals 9. potato 5. Energies Introduction luxurious flamboyant is a unique plus based on few basic characteristics. First, it is in t he first place a monetary asset, and partly a commodity.As much as two deuce-aces of golds total accumulated retentivitys relate to store of look on considerations. Holdings in this category include the central bank reserves, private investments, and high-cartage jewellery bought primarily in developing countries as a vehicle for savings. Thus, gold is primarily a monetary asset. Less than one tertiary of golds total accumulated holdings can be considered a commodity, the jewelry bought in Western markets for adornment, and gold used in industry. The distinction among gold and commodities is all- significant(prenominal). silver has maintained its value in after-inflation terms over the grand run, while commodities have declined. Some analysts like to think of gold as a currency without a country.It is an outside(a)ly accept asset that is not dependent upon any governments expect to pay. This is an important feature when comparing gold to conventional diversifiers like T -bills or bonds, which distant gold, do have counter-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 golden Contract Act, which prohibited the citizens of India from holding pure gold bars and coins due to loss of reserves during the indo-china war. It was declared that the old holdings in pure gold bars to be mandatorily converted into jewelry. Pure gold bars and coins were to be dealt only by licensed dealers.A large un ex officio market sprung up which dealt in bullion only as a consequence of this legislation that adversely abnormal the official gold market. This also made way for smuggling and opaque marketing, which comprised of many jewelers and bullion traders. In 1990, India was on a verge of remissness of external liabilities as it had a study foreign exchange problem. It had to give up the concept of incorporateling and licensing as it led to n othing 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 amber control Act in 1992 and liberalized the import of gold in India for a concern 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 flourishd off the unofficial trade i. e. smuggling and black marketing. This makes India the virtually price-sensitive market for gold in the world. Gold in Indian present scenario Gold is cute 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 hoarding lean is well ingrained in Indian society, not least because inheritance laws in the middle of the twentieth century lent a neat desirability 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 conjure up of the heavy buying in the first quarter due to fears for the stableness of the Japanese banking system. In 1998-2001 inclusive, one-year Indian demand for gold in jewelry exceeded 600 tons in 2002, however, due to rising and volatile 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 investment vehicles, but is also a reflection 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 multinationally 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 nicety Gold is a precious metal with which man kind has had a long and very intimate relation. Gold is considered as a type of purity and good fortune. Mos t 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 bullion gold is considered as a security or assets which can be converted in to immediate payment when ever required. Gold is very good investment due to systematically increasing value, gold is considered as safe and secure investment ? Gold is a goof gift item it is precious and worthy it is again as gift during wedding birthdays or any other peculiar(a) occasions. It is attribute of prestige and is considered auspicious ? Gold considered as status 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 Hindu goddess lakshmi. Gold is bought or gifted on occasions of festivals like Dhanteras Dussera and diwali . ? Gold has prominent ornamental value women and gold jewellery are inseparable from s eparately other.Gold ornaments area always in fashion and will never become out of fashion . even the wedding rings are made of gold to mark a long lasting relationship ? Gold Ancentral property Gold is passed down from generation to generation as an genetic property. .Gold producing countries South Africa United states Australia China Canada Russia Indonesia Peru Uzbekistan Papua new guinea Ghana brazil-nut tree Chile Philippines Mali Mexico Argentina Kyrgyz tan Zimbabwe Colombia The largest producer of Gold is South Africa. It accounts for an estimated 16. 5 million ounces of Gold yearly in the next 3 year and produces al roughly 20 percent of the worlds bullion.Hopping to control its declining work trend due to the extended weakness in the price of Gold in recent years. The South African Gold industry is running(a) in the direction to lower its production monetary values and boost productivity. The second largest producer of gold is united states. It acc ounts for an estimated 10. 4 million ounces of Gold annually by 2001 and produces about 12. 5% of the world Gold supply delinquent to the expansion US Mining trading operations. And because of the reduced profitability due to the low price of Gold. Reduction in mine production is expected 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 top 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 match 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 bragging(a) producers Current Scenario in Indian Commodity Market Need of commodity derivatives for India India is among top 5 producers of most of the commod ities, in addition to being a major consumer of bullion and energy products. farming contributes about 22% GDP of Indian economy. It employees most 57% of the tote force on total of 163 million hectors of land Agriculture arena is an important factor in achieving a GDP growth of 8-10%. entirely 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 NATIONAL COMMODITY AND DERIVATIES EXHANGE ? NSEL NATIONAL SPOT EXHANGE LTD ? NMCE NATIONAL surface 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 crack futures trading in 55 different commodities. Established in November 2003 by Financial Technologies, the MCX hold a permanent recognition 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, further it has even become the third largest in bullion and second largest in silvern future trading in the world. Coming to trade pattern, though there are about deoxycytidine monophosphate commodities trade on MCX, only 3 or 4 commodities contribute for more than 80 percent of total trade volume. As per recent data the largely trade commodities are Gold, Silver, Energy and base Metals.Incidentally the futures trends of these commodities are mainly driven by internationalistic futures prices rather than the changes in house servant demand-supply and hence, the price signals largely reflect international scenario. Among agriculture commodi ties major volume contributors include Gur, Urad, Mentha oil etc. whose market size of its are considerably small making then compromising to manipulations. 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 common indwelling 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 specified by FMC). National Commodity and Derivatives Exchange Ltd (NCDEX) is a technology driven commodity exchange. It is a public limited company registered under the Companies Act, 1956 with the Register 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 c ommodity exchange platform for market participants to trade in a wide spectrum of commodity derivatives driven by best globular practices, professionalism and transparency.In December 2003, the National Commodity and Derivatives Exchange Ltd (NCDEX) launched futures trading in nine major commodities. To begin with contracts in Gold, Silver, Cotton, soybean 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 proportion of commodities with big market size as jute rubber etc. But, in consequent 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 be en 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 categorize as following types of commodities. 1. Agricultural products. 2. Precious metals. 3. Other metals. 4. Energy. GENERAL 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 one-third 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 d river of the real price of gold is stock equilibrium rather than flow equilibrium. ? Effective Portfolio Diversifier this phrase summarizes the proceeds of gold in terms of Modern Portfolio Theory, a schema 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 tralatitious diversifiers such as bonds and alternative assets)increase, thus reducing the intended buffer 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 lean 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 launch supply from sales by central banks, reclaimed scrape 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 ? London is the biggest as well as the oldest gold market in the world. ? Mumbai under Indias liberalized gold regime. ? New York as the home of futures trading. ? Zurich as a physical turntable. ? Istanbul, Dubai, Singapore and Hong Kong as doorways to important consuming regions. ? Tokyo was TOCOM sets the mood 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 regimen 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 fastest increase com modity futures exchange in the world, in terms of the number of contracts 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 Gas 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), New York mercenary Exchange, Shanghai Futures Exchange (SHFE), Sydney Futures Exchange, The Agricultural Futures Exchange of Thailand (AFET), among others. For MCX, staying connected to the grassroots is imperative.Its domestic alliances aid in improving ethical standards and providing services and facilities for overall returns 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 generally referred to as Exchange Traded Commodities or Exchange Traded Funds (ETFs), and are expected to track the gold price almost perfectly. Unlike derivative products, the securities are 100% backed by physical gold held mainly in storage 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 delivery of a specified step and purity of gold on a cocksure date at an agree price. The initial margin or cash deposit paid to the broker is only a fraction of the price of the gold underlying the contract. That means investors can achieve notional willpower 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 spot price for gold. Futures contracts are traded on regulated commodity exchanges. The largest are the New York moneymaking(a) Exchange Comex Division (recently rebranded CME Globex, after a merger between loot 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 bearer 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 spot price of gold, the level of the pre-agreed price (the strike price), interest rates, 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 holder 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 premium 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 end-to-end 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 cite 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 bow shows the gold price fluctuation In the recent scenario there are various issues and factor responsible for the gold price fluctuation. Increasing shortfall 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 closely related to the gold price. As the interest rate rise the general leaning is for the gold price, which earn no interest to fall and rates dive 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 he dge 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. some(prenominal) other factors which are responsible to pushes the gold prices upward political turmoil and war monetary expansion, economic misbalance because of these reasons people lose their faith in the value of their currency and they invest into the gold as permanent or a fixed assets. pic