Gold Price Outlook

Trend in Gold price from 2010 till date

The Year 2016 so far

Price Moving Factors in 2016 Gold started the year on a positive note led by a sharp fall in Chinese equity markets Global economic concerns forced Fed to delay interest rate hike Central banks like Japan cut lending rates to negative to boost liquidity Safe haven buying increased amid Britain’s decision to exit the European Union. Gold hit a 2-year high of $1374/oz in July Market players held on the metal ahead of US Presidential elections in November Gold surged to $1337/oz on November 8 as Donald Trump won the US Presidential election Gold ended at $1277/oz on November 8 itself as market players squared off positions Price fell more than 10% since then amid concurrent rise in US dollar, yields and equity market Fed raised its interest rate for the second time in a year; seems three rate hikes next year Gold set to end the year with a minor gain and looks at uncertain 2017

Price Moving Factors in 2016 Gold’s recent fall has been affected by gains in US equity market, dollar index and yields

Global Demand Supply Trend Global markets remains oversupplied as higher price crashes demand. Mine production steady while recycled supply increases with price

Trend in Consumer Demand Consumer demand has been on a downward path in last few quarters as higher prices dented jewellery demand and retail investment

Trend in Indian Gold Imports India is highly reliant on imports for its gold requirement. Imports have been low due to higher price and fear of tighter regulation in gold market.

Trend in ETF demand ETF flows have been very price sensitive. ETF saw net inflows in first three quarter but sharp outflows in last few weeks.

Trend in Speculative Positions Gold speculators have exited long positions sharply in last few weeks but are still above recent highs. Shorts have varied less significantly this year but off recent high set in 2015

Gold Demand Supply Outlook 2017 On demand front, jewellery demand is highly price sensitive while ETF demand is based more on price outlook Central bank buying has more long term outlook but sharp price movement could cause sizeable variations According to GFMS forecast, global demand is expected to total 3845 tonnes in 2014, down 2.8% from a year ago Supply is forecasted near 4445 tonnes, down 1.2% from a year ago. Mine production is expected to be lower while recycled supply is forecasted to be up by nearly 10%; Recycled gold supply is price sensitive. The surge in gold price in 2016 led to expectations of higher recycled supply However, the actual supply may be much lower if price remains low. Global market is expected to be oversupplied by about 600 tonnes Key factors to look for will be Indian and Chinese demand, ETF buying, monetary policies of major central banks, political development in Europe and economic policies under Trump adminstration

Gold Price Outlook Gold witnessed sharp movement in 2016 but ended the year with a minor gain The sharp rise in price earlier this year affected consumer demand considerably; recent price slump could kindle some buying interest ETF activity will also be determined by price outlook Fed’s rate hike to keep US dollar and yields higher however aggressive rate hike unlikely Higher borrowing costs and strength in US dollar could be a drag for US economy Market uncertainty high about Trump’s economic policies Political uncertainty high in Europe with elections scheduled this year in Germany, Italy, France Brexit process to be initiated soon, safe haven buying may persist Overall, gold fell sharply on profit taking as major events are over. However, none of these events ended in a favourable outcome and uncertainty will persist Gold could see some recovery in the near term and could trade in a range of $1070-1250/oz. MCX Gold may trade in a range of Rs.25500-29500/10gram

Gold Technical Outlook COMEX Gold – Buy around 1090/1080, Target 1220, Stop loss below 1040 MCX Gold April – Buy around 26300/26200, Target 29200, Stop loss below 24800

Silver Technical Outlook COMEX Silver – Buy around 14.80/14.60, Target 17.20/18, Stop loss below 13.60 MCX Silver May – Buy around 37000/36800, Target 42200/44000, Stop loss below 34200

USD INR Outlook Rupee is consolidating after recent slump to near record low levels. Rupee may remain under pressure weighed down by economic uncertainty post demonetization decision, fear of fund outflow post Fed decision and outlook for lower interest rate. Risk sentiment could create short term fluctuations. Rupee may trade in a range of 66.3-68.9

Gold Contract Specification   Gold Regular Gold Mini Gold Guinea Gold Petal Gold Global Contract Months Feb, Apr, Jun, Aug, Oct, Dec Jan to Dec Jan, Mar, May, Jul, Sep, Nov Expiry Date 5th of the contract month Last day of contract month End of month with currency futures Trading Unit 1 kilogram 100 grams 8 grams 1 gram 200 grams Quotation Rs per 10 gram Rs per 8 gram Rs per 1 gram Impact of 1 Re movement 100 10 1 20 Daily Price Limit 3% Initial Margin 5% Client Limit 5 MT for all gold contracts combined together Delivery Period 1st to 6th day of contract Month 2 working days after expiry 4 working days after expiry 1st to 2nd day after expiry Delivery period margin 25% Delivery Unit Delivery Type Compulsory Both Options Delivery Center Ahmedabad, Mumbai & add Ahmedabad & add Ahmedabad &add Mumbai & add centers Ahmedabad Due Date Rate Calculation simple avg of last 3 days of spot market price of Ahmedabad Ahmedabad spot price on expiry day Mumbai spot price on expiry day International price at RBI reference rate

Volume in Gold on MCX (kilograms) Exchange Volume- Gold Volume in Gold on MCX (kilograms) Year Regular Mini Guinea Petal Global 2005 2600407 9846 2006 9957351 187042 2007 7604891 273560 2008 14024217 1002715 15599 2009 12144967 1475645 28176 2010 12052225 1530716 33776 2011 12655760 2620054 75290 31087 2012 10287609 2221341 58853 36004 2013 8944603 1586010 29087 19021 2014 3971634 492638 5267 3298 2015 3947175 477267 3657 2490 6036 2016* 4038802 548900 3321 2920 6 * Volume data is until Dec.19

Kotak Commodity Services Private Limited Promoted by the Kotak family, a family which has a lineage of over seven decades in commodity markets, there by garnering great insight about the physical commodity markets. Members of NCDEX (National Commodity and Derivatives Exchange Ltd) and MCX (Multi Commodity Exchange of India Ltd), the two leading national level commodity exchanges. Pan India presence with HQ in Mumbai ( 27 Branches and 200 Authorized Partners across India) 14 hour Dealing desk, manned by trained and experienced dealers, catering to all executionary requirements of the client. A well appointed research team, comprising of Fundamental and Technical Research Analysts, covering a broad range of commodities.

KCSPL Research Different types of call given by KCSPL Research For intraday trading purpose Intraday Calls- About 8-10 calls given during the day based on opportunity Pick of the Day- Daily few calls are selected which are likely to give the best trading opportunity for the day Pick of the Evening- One to two calls are given particularly for evening session in anticipation of movement in international market For short term to positions purpose Pick of the Week- Calls given for the time frame of a week keeping in mind the various important events Quarterly View- These are positional calls given for a time frame of three months Spread calls- Calendar spread and intra commodity spreads given as and when opportunity Ratio Calls- Intra Commodity calls are also given in form of ratio

Presentation by Kotak Commodity Research Thank You Presentation by Kotak Commodity Research