Gold Prices to Trade Higher


Spot gold traded higher by 2.3 percent last week while silver prices also rose 3.4 percent. Gold prices rose as minutes from a U.S. Federal Reserve September meeting showed policymakers had a prolonged debate about prospects of a pick – up in inflation and slowing the path of future interest rate rises if it did not. Weak dollar index and geopolitical tensions in Spain and North Korea further supported the rally in gold. Russia and China both called for restraint on North Korea following a Twitter post from U.S. President Donald Trump hinting that military action was on his mind. The focus of the markets have now shifted from the geo – political crisis  to the economic data that will be released from the US, besides, the  possibility of rate hike scenario in the US is a factor for gold prices to move lower in the week ahead.


Geo – political crisis and economic data from US will be the key going forward, besides, the possibility of rate hike scenario in the US is a factor for gold prices to move lower in the sessions ahead. ON the MCX, gold prices are expected to trade higher today, international markets are trading lower by 0.2 percent at $1302 per ounce.

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Government Fixes rate at Rs 2,987 per Gram for Sovereign Gold Bond

The government on Friday fixed the purchase price of Sovereign Gold Bond (SGB) at Rs 2,987 per gram the subscription for which will open on October 16, a few days before Dhanteras festival.

Dhanteras is considered auspicious for buying gold and jewellery.

For the subscription period from October 16-18, the nominal value of the bond based on the simple average closing price for gold of 999 purity of the last three business days of the week preceding the subscription period, that is October 11-13, 2017 works out to Rs 2,987 per gram, the RBI said in a statement.

This is a part of SGB calender announced till December spread over 12 weeks. As per the calender it will open for subscription from Monday to Wednesday of every week starting from October 9 until December 27. The first tranche under this closed on October 11.

The settlement will be made on the first business day of the next week for the applications received during a given week.

The maximum limit of subscribed would be 4 kg for individual and HUF and 20 kg for trusts and similar entities per fiscal (April-March) notified by the government from time to time.

The annual ceiling will include bonds subscribed under different tranches during initial issuance by the government and those purchase from the secondary market.

Investors in these bonds have been provided with the option of holding them in physical or dematerialized form.

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How Introduction of Options will affect Commodity Markets

Finally, the wait is over for Commodities Market as MCX is all set to launch Options in Gold in the month of October. This will be a game changer for the commodities market as it will result in the participation of new players in the market as it carries low risk with it as compares to Futures.

Let’s have a basic understanding of Option First.

An option is a financial derivative that represents a contract sold by one party (the option writer) to another party (the option holder). The contract offers the buyer the right, but not the obligation, to buy (call) or sell (put) a security or other financial asset at an agreed-upon price (the strike price) during a certain period of time or on a specific date (exercise date).

Main Advantage of Option over Future

In future trading, the trader is exposed to big losses whichever side of the contract you are on. If you have the obligation to buy an underlying security at a fixed price and the security moves significantly above that fixed price, then you could lose substantial sums. Conversely, if you have the obligation to sell an underlying security at a fixed price and the security moves significantly below that fixed price then you could experience sizable losses.

If you are writing options contracts and taking on an obligation to either buy or sell an underlying security at a fixed price, then you are exposed to similar risks. However, you can trade options purely by buying contracts and not writing them. This means that you can limit your potential losses on each and every trade you make to the amount of money you invest in buying specific contracts. Whenever you buy options contracts, the worst case scenario is that they expire worthless and you lose your initial investment.

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