PART –A

1. INDUSTRY PROVILE:-

Foreign exchange market (For ex, FX, or currency market) is a global, worldwide decentralized financial market for trading currencies. Financial centers around the world function as anchors of trading between a wide range of different type of buyers and sellers around the clock, with the exception of weekends. The foreign exchange market determines the relative values of different currencies.

The primary purpose of foreign exchange is to assist international trade and investment, by allowing business to convert one currency to another currency. For example, it permits a US business to import British goods and pay pound sterling, even though business income is in US dollars. It also supports direct speculation in the value of currencies, and the carry trade, speculation on the change in interest rates in two currencies.

In a typical foreign exchange transaction, a party purchases a quantity of one currency by paying a quantity of another currency. The modern foreign exchange market began forming during the 1970s after the decades of government restrictions on foreign exchange transaction (the Bretton Wood s system of monetary management established the rules of commercial and financial relations among the world’s major industrial states after World War II), when countries gradually switched to floating exchange rates from the previous exchange rate regime, which remained fixed as pr the Bretton Woods system.

Market participants

Banks:

The interbank market caters for both the majority of commercial turnover and large amounts of speculative trading every day. Many large banks may trade billions of dollars, daily. Some of this trading is undertaken on behalf of customer. But much is conducted by propriety desks, which are the trading desks for bank’s account. Until recently, foreign exchange brokers did large amount of business, facilities interbank trading and matching anonymous counterparts for large fees. Today, however, much of this business moved on to more efficient electronic systems. The

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broker squawk box lets traders listen in on ongoing interbank trading and is heard is most trading rooms, but turnover is noticeably smaller than just a few years ago.

Commercial companies:

An important part of this market comes from the financial activities of companies seeking foreign exchange to pay goods or services. Commercial companies often trade fairly small amounts compare to those of banks or speculators, and their trades often have little short term impact on market rates. Nevertheless, trades flows are an important factor in the long-term direction of a currency’s exchange rate. Some multinational companies can have an unpredictable impact when very large positions are uncovered due to exposures that are not widely known by other market participants.

Central banks:

For ex is fixing is the daily monetary exchange rate fixed by the national bank of each country. The idea is that central banks use the fixing time and exchange rate to evaluate behavior of their currency. Fixing exchange rates reflects the real value of equilibrium in the forex market. Banks, dealers and online foreign exchange traders use fixing rates as a trend indicator.

The mere expectation or rumor of central bank intervention might be enough to stabilize a currency, but aggressive intervention might be used several times each year in the countries with a dirty float currency regime. Central banks do not always achieve their objectives. The combines sources of the market can easily overwhelm any central bank. Several scenarios of this nature were seen in the 1992-93 ERM collapse and in more recent times in Southeast Asia.

Hedge funds as speculators:

About 70% to 90% of the foreign exchange transactions are speculative. In other words, the person or institution that bought or sold the currency has no plan to actually take delivery in the end; rather, they were solely speculating n the movement of that particular currency. Hedge funds have gained a reputation for aggressive currency speculation since 1996. They control billions of dollars of equity and may borrow billions more, and thus may overwhelm intervention by

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central bank to support almost any currency, if the economic fundamentals are in the hedge fund’s favor.

Investment management firms

Investment management firms (who typically manage large accounts on behalf of customers such as pension funds and endowments) use the foreign exchange market to facilitate transactions in foreign securities. For example an investment manager bearing an international equity portfolio needs to purchase and sell several pairs of foreign currencies to pay for foreign securities purchases.

Some investment management firms also have more speculative specialist currency overlay operations, which manage clients’ currency exposure with the aim or generating profits as well as limiting risk. Whilst the number of this type of specialist firms is quite small, many have a large value of assets under management (AUM), and hence can generate large trades.

Retail foreign exchange traders:

Individual retail speculative traders constitute a growing segment of this market with the advent of retail for ex platforms both in size and importance. Currently, they participate indirectly though brokers or bank. Retail brokers, while largely controlled and regulated in USA by CFTC and NFA have in the past been subjected to periodic foreign exchange scams. To deal with the issue, the NFA and CFTC began (2009) imposing stricter requirements, particularly in relation to the amount of Net Capitalization required of its members. As a result many of the smaller and perhaps questionable brokers operate from the UK under FSA regulations where for ex trading using margin is part of the wider over-the counter derivatives trading industry that includes CFDs and financial spread betting.

There are two main type of retail FX brokers offering the opportunity for speculative currency trading: brokers and dealers or market makers. Brokers serve as an agent of the customer in the broader FX market, by seeking the best price in the market for a retail order and dealing on behalf of the retail customer. They charge a commission or mark-up in addition to the price obtained in the market. Dealers or market makers, by contrast typically act as principal in the transaction versus the retail customer, and quote price they are willing to deal at.

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Non-bank foreign exchange companies:

Non-bank foreign exchange companies offer currency exchange and international payments to private individuals and companies. There are also know as foreign exchange brokers but are distinct in that they do not offer speculative trading but rather currency exchange with payments (i.e., there is usually a physical delivery of currency to a bank account).

It is estimated that in the UK, 14% of the currency transfers/payments are made via foreign exchange companies. These companies selling point is usually that they will offer better exchange rates or cheaper payments than the customer’s bank. These companies differ from money transfer/remittance Companies in that they generally offer higher-values services.

Money transfer/remittance companies and bureau de changes

Money transfer companies/remittance companies perform high-value low-value transfers generally by economic migrants back to their home country. In 2007, the Aite Group estimated that there were $369 billion of remittance (an increase of 8% compared to 2006). The four largest markets (India, China, Mexico and the Philippines) receive $95 billion.

The largest and best known provider is Western Union with 345,000 agents globally followed by UAE exchange. Bureau de change or currency transfer companies provide low value foreign exchange. Bureau de change or currency transfer companies provide low value foreign exchange services for travelers. These are typically located at airports and stations or at tourist locations and allow physical notes to be exchanged from one currency to other. They access the foreign exchange markets via banks or non bank foreign exchange companies.

ABOUT FOREX

FOREX, FOREIGN EXCHANGE, foreign exchange market is a cash interbank market established in 1971. The FOREX is a group of approximately 4500 currency trading institutions including international bank, government central banks and commercial companies. FOREX is a true 24hrs market and trading begins each day in Sydney and moves around globe as the business day begins in each financial centre, first in Tokyo, then in London and then New York. (Timings

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New Zealand & Australia 03:30-12:30, Japan and Singapore : 06:30 – 14:30, Germany and England : 14:30-21:30, America : 18:30-02:30). The forex market is larger than all other financial markets combined. It is two ways market were both buying and selling can be done. FOREX market is the largest financial market in the world with a daily average turnover of $4 trillion – it is 30 times larger than the combined volume of all US equity market. The most traded currencies in forex market are US dollars, Euro, Japanese Yen, Pound sterling, Australian Dollar, Swiss franc, Canadian Dollar, Hong Kong Dollar, Swedish Koran, and New Zealand Dollar. FOREX is the most liquefied market in the world.

THE GLOBAL CURRENCY MARKET CAPITALIZATION

THE ASSET WORLD AVERAGE DAILY

TURNOVER 2010

The Largest and Most Liquid Trading Market in the World!

$ 70 Billion New York Stock Exchange

$ 500 Billion US Treasuries

$4.2 Trillion Global Foreign Exchange

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2. COMPANY PROFILE:

A. Background and Inception of the company

Harvest group was established in 2003. Harvest group was founded to provide the best possible, indices and stock trading experience for online trade. Harvest group is backed by a large financial group of companies with over US $ 16 billion in assets under management.

Harvest group takes pride in its stringent management control as far as its business infrastructure goes. Utilizing its subsidiary companies or strategic alliances of Harvest International Consortium Ltd., in Hong Kong and in Indonesia and Harvest Futures Consultants India Pvt. Ltd., to provide paramount global financial advice network to our clients.

Harvest Group has a worldwide operation network reaching 8 countries and 40 regions. USA, Indonesia, INDIA, Hong Kong, china, Vietnam, Brunei, Malaysia, Philippines, Singapore, Taiwan, Laos and Thailand employing more than 1300 staffs to serve the global demanding market in financial services.

Harvest Group has built a strong team in the area of marketing in order to provide our clients professional services as well as customer support. From senior management, seasonal financial consultants, state of art trading platform as well as professional customer services team. Harvest Group is dedicated in providing our clients the fastest, best possible financial service.

Harvest offer the long of trading technology, features the powerful, MT4 (Meta Trading 4) station for individual traders and multi account platform for asset, and PDA and Smartphone solutions for trading on the move.

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B. Nature of business carried:

Harvest is a financial service providing company on currencies and commodities, it operates globally. It is the one stop shop for all investment need for the Indian retail investors who are interested in global investment. Harvest provide terminal for the investors for buying and selling of currencies and commodities (but no actual delivery of the products).

1. Information & Training Centre2. Futures Contract Transactions3. Foreign Exchange Trading4. Index Trading5. Commodity Bullion Trading6. Portfolio management service

C. Vision and Mission: Vision:

To become most credible Future broker globally with the widest portfolio of financial products that serves the clients globally, investing and transacting in Futures Exchanges, especially with major commodity products and Foreign Exchange.

Mission:

To give most credible advice to individual investors, on potential investment opportunities in Future Exchange, balancing risk and profitability.

To educate the investing public on Futures Exchange and provide the complete understanding so that they may exploit the maximum benefits.

To engage with all the stakeholders and help create an organized Futures Exchange that is credible and transparent while promoting healthy and fair competition.

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D. Products/Service profile:

The Harvest group provides the following services:

Information & Training Centre Futures Contract Transactions Foreign Exchange Trading Index Trading Commodity Bullion Trading Portofolio management services Online Sport Interbank Currency Trading.

E. Ownership pattern:

Harvest Futures Consultants India Pvt. Ltd., is a subsidiary company of PT Harvest International Futures of Jakarta, Indonesia.

F. Area of Operations:

Harvest Group has a worldwide operation network reaching 8 countries and 40 regions. The regions are USA Indonesia, INDIA, Hong Kong, China, Vietnam, Brunei, Malaysia, Philippines, Singapore, Taiwan, Laos and Thailand employing more than 1300 staffs to serve the global demanding market in financial services.

In India harvest group operates mainly in Bangalore, Delhi, Hyderabad, and Chennai, Harvest group has channel partners in India at various places i.e. New Delhi, Mangalore, Udupi, Mysore, Vijayawada, Ramachandrapuram (Andhra Pradesh), Chandigarh, Kerala, Gujarat, Pune, Salem, Kakinada.

CORPORATE INFORMATION

DATE OF INCORPORATION : 18th November 2009

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REDG. OFF : Harvest Futures Consultants India Pvt. Ltd.,

#17 “Park View”, Curve Road, Tasker Town,

Bangalore – 560 051. Karnataka, India.

EXECUTIVE DIRECTOR : Mr. Richard Tai Sweek Keong (Malaysia)

BUSINESS DIRECTOR : Mr. Rajendra Pillai (Singapore)

DIRECTOR : Mr. Naveen Kumar H.M (India)

ADVOCATE : Chambers of Jayashri Mural

303, 3rd Floor, Commerce House,

Millers Road, Bangalore – 560 052.

AUDITOR : C.P. Ethirajan

#38, 1st Floor, Nehru Circle,

Sheshadripuram, Bangalore – 560 020.

COMPANY SECRETARY : S.P. NagarajanS-818, 8th Floor,

South Block – Manipal Centre

47, Dickenson Road, Bangalore – 560 042.

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G. Infrastructural facility: Harvest Futures Consultants India Pvt. Ltd is located in Bangalore-Shivajinagar. The company has rented property. Total area rented and built in area of the company is 2,500 square feet. Cleanliness is given utmost importance in the company. All good information technology support is available. There are air – conditioners, proper lighting and ventilation and Tele communication facilities. Harvest also provides travel allowances, productivity bonus and other facilities to the employees.

The branches of the Harvest Company is computerized and all transactions of trading done with ease of operation

Telephone

Intranet and internet

Conference room

Training room

Help line : knowledge about trading and marketing

Company e-mail.

For each and every employee and advisors of the company will get their personal ID where in they are recognized as the part of the Harvest and update things like perk, commission account, keep in track of target.

Technology

With over 2,500 sq ft of building infrastructure they have used technology to enable their business in Bangalore and delivery services with cutting edge technology.

The various aspects with regards to infrastructure are described below.

Network

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The local area networks are deployed using best cable for data and voice with the facility to create segregated virtual user and corporate LANS.

Software used in Harvest is the META TRADER 4.

HOW DOES HARVEST WORK

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H. Certification of harvest group in various countries

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BROKERAGE LICENCE AND CERTIFICATE OF MEMBERSHIP OF HARVEST GROUP

1. Member of The Jakarta Futures Exchanges

2. Member of Indonesian Derivatives Clearing House

3. Jakarta Future Trading Broker

4. Member of The Commodity Trading

5. Hong Kong Securities & Future Commission

6. Chinese Gold & Silver Exchange Society

7. National Futures Exchange

I. Work flow model:

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End to end process:

END TO END PROCESS INVOLVES VARIOUS STEPS:

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Clients

Harvest futures

Transfer of Funds

A segregated account in client’s name

Trading

Transfer of Funds

Data gathering:

This is the first step which involves collection of data pertaining to the Clients

details and their telephone numbers.

Tele calling :

Tele calling involves picking the numbers and making the calls with proper

communication skills.

Fixing appointments:

Through proper communications, the employee will convince the person on

telephone and convince the people who are interested and fixing the appointment

for the interested people.

Detail explanation of currency trading:

The employee (business consultant) will communicate with Clients and explain

about rules and regulations of the trading and also about the company.

Following interested people:

The company will follow the interested people for few days. Try to open the

account as soon as possible.

Opening the account:

When the person is ready to invest the money in the forex, a segregated account is

opened in the bank. Trading is carried down either by the Client or by portfolio

manager of the company.

Trading the account:

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Once the account has been opened the client or the portfolio manager of the company will trade the account with proper knowledge about the market. All transactions are done through the account. If the client is unable to trade, then behalf of the client the portfolio manager will trade the account.

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3. MC KINSEY’S 7S Frame Work

The McKinsey’s 7S Framework is a management model developed by well-known business consultants Rebort H. Waterman, Jr. and Tom Peters in the1980s. This was a strategic vision for groups, to include business, busi8ness units, and teams. The 7S are structure, strategy, systems, skills, styles, staff and shared values.

The model is most often used as a tool to assess and monitor changes in the internal situation of an organization. The model is based on the theory that, for an organization to perform well, these seven elements need to be aligned and mutually reinforcing. So, the model can be used to help identify what need to be realigned to improve performance, or to maintain alignment (and performance) during other types of change.

The McKinsey 7S model involves seven interdependent factors which are categorized as either “hard” or “soft” elements:

“Hard” element are easier to define or identify and management can directly influence them:

These are strategy statement; organization charts and reporting lines; and formal process. “Soft” elements, on the other hand, can be more difficult to describe, and are less tangible and more influenced by culture. However, there soft elements are as important as the hard elements if the organization in going to be successful.

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1. Strategy :

Strategy refers to the determination of the purpose and the basis long term objective of an enterprise and the adoption of course of action and allocation of resources necessary to achieve these aims.

Harvest aims at higher profitability through customer satisfaction and brining awareness about the forex market. Maximizing the investor’s wealth in short duration of time.

2. Structure:

It represents the way the organization is structured and who reports to whom. Business needs to be organized in a specific form of shape that is generally referred to as organizational structure. Organizations are structured in a variety

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of ways, dependent on their objectives and culture. The structure of the company often dictates the way it operates and performs.

Harvest has a well-build organization structure as:

Corporate office Regional office Branches Channel partners

The head of the branch (Director) come down and assist the Branch manager and branch manager assists portfolio manager to perform well various activities of the company and managers assist assistant portfolio managers and last stage in the structure is business consultants and trainees.

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EXECUTIVE DIRECTOR

BUSINESS DIRECTOR

DIRECTOR

BUSINESS MANAGER

PORTFOLIO MANAGER HR MANAGER

ASSIST ANT PORTFOLIO MANAGER

BUSINESS CONSULTANTS

TRAINEES

3. SYSTEMS :

Systems define the flow of activities involved in the daily operation of business, including its core process and its support systems. They refer to the procedures, process and routine that are used to manage the organization and characterize how important work is to be done.

Harvest group’s systematic framework stands for rules and regulations, procedure and practices that must followed to carry out tasks in the organization. These include the formal system procedure of using intranet facility being the whole organization is computerized. The flow of decision is from the top level direction through managers to business consultants.

4. STYLE:

“Cultural style, distinct management and how key managers behave in achieving the organizational goal”. It includes the dominate valued. Beliefs and norms which norms which develop over time and becomes relatively enduring the features of the organizational life.

Harvest follows participative style

Harvest take collective decision at all levels of the management.

Leadership style: participative or democratic

5. STAFF:

“Organization are made up of humans and its people who make the real difference to the success of the organization in the increasingly knowledge based society”.

The harvest has very efficient and multi skilled employees who has the strength and complete knowledge about trading activates and flexibility to work in different departments.

6. SKILLS:The skill is closely6 related to staff and the distinctive abilities and talents that a company possesses. Skill may range from ability of a staff to speak and understanding of local languages and also computer literacy.

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“Distinct capabilities or personnel and organizations as a whole”

Managerial skill Computer skill Inter personal skill Creative e and innovative skill.

7. SHARED VALUES:

Shared values are the core values of the company that are evidenced in the corporate culture and the general work ethic. All members of the organization share some common fundamental ideas or guiding concepts around which the business is built. The shared value or super ordinate goal of the company is to achieve excellence in a particular field. These values and common goals keep the employees working towards a common destination as a coherent team and are important to keep the team spirit alive.

1. Consider the employees as the key recourses of the organization and provide assistance.

2. Customer satisfaction rather than profit maximization.

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4. SWOT ANALYSIS

SWOT analysis is an acronym for the internal strength and weaknesses of a firm and the external opportunities and threads facing that firm. SWOT analysis helps managers to have quick overview of the firm’s strategic situation and assess whether there is a sound ‘fit’ between internal resources, values and external environment.

STRENGTHS:

1. Led by the dedicated and expertise focused professional for trading.2. Efficient trading with live, executable price with instant trade confirmation.3. High liquidity.4. Fully regulated by JAKARTA FUTURES EXCHANGE.5. 2- Way profit potential, when the market goes, UP or DOWN.6. All Profits are earned in U.S. Dollars.7. Flexible withdrawal within 24hrs.8. High Leverage (1: 100).9. 24 Hours Portfolio Management assisted by trained and professional

advisors.

WEAKNESSES

1. Lack of expertise in trading since forex is big market.2. Expensive products.3. Low awareness due to lack of advertisement.

OPPORTUNITIES:

1. Huge untapped market in cities and towns of India can be concentrated to increase the business.

2. Moving into new trading strategies that offer increased profits with less cost and time saver e.g. auto pilots or robots.

3. A developing market such as the Internet.

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THREATS:

1. Lack of knowledge on forex market.2. Lack of guidance on choice of broker.3. Accessibility to tested and trusted forex auto trader (robot).4. Emotional instability among traders.5. Constancy of power supply- this is a serious threat because to auto trade

your PC must be on 24/7/

The application of the swot analysis is however subjective, that is, results cannot be generalized because individual difference has a role to play in the final result.

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5. Analysis of Financial Statement:

DEC 2011 DEC 2012INCOMESales Turnover 243.00 274.76Excise Duty 0.00 0.00Net Sales 243.09 274.76Other Income 0.00 0.00TOTAL INCOME 243.09 274.76EXPENDITUREManufacturing Expenses 0.00 0.00Materials Consumed 0.00 0.00Personal Expenses 80.26 78.55Selling Expenses 39.56 37.54Administrative Expenses 64.88 68.69Expenses Capitalized 0.00 0.00Provisions Made 0.00 0.00TOTAL EXPENDITURE 184.70 184.78Operating Profit 58.39 89.98EBITDA 59.10 91.04Depreciation 9.85 8.88Other Write-offs 0.00 0.00EBIT 49.24 82.16Interest 20.09 35.02EBT 29.16 47.14Taxes 11.94 20.26Profit & Loss for the year 17.22 26.88Non Recurring Items -0.80 -3.37Other Non Cash Adjustments 5.80 6.69Other Adjustments 0.00 3.19REPORTED PAT 22.16 33.39Preference Divided 0.08 1.35Equity Dividend 7.93 7.93Equity Divided (%) 37.49 49.31Shares Is Issue (lakhs) 2114.47 1607.96EPS - Annualized 1.05 2.08

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BALANCE SHEET OF HARVEST FUTURES

DEC 2011 DEC 2012Source Of Funds Total Share Capital 217.40 121.67Equity Share Capital 21.74 16.08Share Application Money 0.00 0.00Preference Share Capital 0.00 105.59Reserves 250.79 75.71Revaluation Reserves 0.00 0.00Net Worth 272.53 197.78Secured Loans 0.48 0.01Unsecured Loans 167.10 257.40Total Debt 167.58 257.41Total Liabilities 440.11 454.79

Application of FundGross Block 123.79 114.92Less : Accm. Depreciation 63.41 55.95Net Block 60.38 58.97Capital Work in Progress 2.27 1.04Investments 192.54 192.54Inventories 0.00 0.00Sundry Debtors 172.12 105.69Cash and Bank balance 118.13 131.75Total Current Assets 290.25 237.44Loan and Advances 90.31 91.12Fixed Deposits 1.07 1.24Total CA, Loans & Advances 381.63 329.80Deferred Credit 0.00 0.00Current Liabilities 184.73 113.20Provisions 11.98 14.36Total CL & Provisions 196.71 127.56Net current Assets 184.92 202.24Miscellaneous Expenses 0.00 0.00Total Assets 440.11 454.79

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6. LEARNING EXPERIENCE :

Learning is a continuous process by which we acquire the knowledge that we apply to our future endeavor. The university has given me an opportunity to learn many aspects pertaining to the working of the organization. The objectives of the project is to study the structure, style, system, skills, strategy, staff, shared values and functioning of the organization. The theoretical study of the management practices will not offer a useful insight if not supplemented by practical exposure.

The Project work at Harvest Futures Consultants India Private Limited exposed me to the management practices. The strategy studies in theory in a controlled environment will fail to deliver in the actual business scenario. Hence this study taught me that firms have to thrive in harsh market realities and even the best of the strategies may be ineffective.

It was an enriching experience to work in Harvest Futures Consultants India Private Limited. It gave me a good exposure where I acquired the practical knowledge about the overall functioning of the organization. The project work has given me an opportunity to study the currency trading and commodity trading in the global market and also how to manage the risk while trading. The project provided an opportunity to relate theoretical aspects in working environment concepts such as delegation of authority, reporting, services etc.

I came to know how employees (traders) communicate with the customers, how the employees provide advice to the customers in buying and selling of currencies and commodities. Harvest helped me in understanding the Tecnhical Analysis which is very much essential in trading to forecast and to predict the future prices of currencies and commodities.

Constant growth and innovtion trading and customer satisfaction has made Harvest group what it is today. It helped me realize that any organization cannot be complacent with its current position. It has to continuously innovate and come out with new ideas.

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The interaction with the employees and customers gave me an insight and a firsthand experience of the organizational scenario and has indeed widened my horizon of knowledge. The disciplined friendly and supportive working environment leads to higher productivity, all the staff workes in a highly disciplined atmosphere.

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PART – B

INTRODUCTION

STATEMENT OF THE PROBLEM

OBJECTIVES

SCOPE OF THE STUDY

METHODOLOGY

LIMINATIONS

OBSERVATIONS

ANALYSIS

FINDINGS

SUGGESTIONS

CONCLUSION

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PART B1. GENERAL INTRODUCTION

Historically, gold has been a proven method of preserving value when a national currency was losing value. Of all the precious metals, gold is the most popular as an investment. Investors generally buy gold as a hedge or safe heaven against any economic, political, social or currency-based crises. These crises include investment market declines, burgeoning national debt, currency failure, inflation, war and social unrest. Investors also buy gold early in a bull market and sell it before a bear market begins, in an attempt to gain financially.

Gold is a monetary metal whose price is determined by inflation, by fluctuation in the dollar and U.S. stocks, by currency-related crises, interest rate volatility and international tensions, and by increases or decreases in the prices of other commodities. The price of gold reacts to supply and demand changes and can be influenced by consumer spending and overall levels of affluence. Gold has been treasured since ancient times for its beauty, warmth, sensuality and spiritual qualities it is the metal choice of millions of consumers for the jewelry they wear. Government and financial institutions view it as the top commodity for storing supporting and retaining wealth. A growing number of industrial applications also depend on this rare mental.

About 90 percent of the gold supplied to the market each year worldwide goes into manufactured products while the remainder goes to private investors and to financial institutions monetary reserves. The manufacture of jewelry is by far the most common use of gold. This application consumes about 75 percent of the gold that comes to market each year.

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FACTORS INFLUENCEING GOLD PRICE:

Supply & Demand

Today, like all investments and commodities, the price of gold is ultimately driven by supply and demand. Unlike most other commodities, the hoarding and disposal plays a much bigger role in affecting the price, because most of the gold ever mined still exists and is potentially able to come on to the market for the right price.

Changes in sentiment

Given the huge quantity of stored gold, compared to the annual production, the price of gld is mainly affected by changes in sentiment, rather than changes in annual production.

International Monetary Funds

Central banks and the International Monetary Fund play an important role in the gold price. At the end of 2004 central banks and official organizations held 19 percent of all ground gold as official gold reserves.

Low or negative real interest rates

If the return on bonds, equities and real estate is not adequately compensating for risk and inflation then the demand for gold and other alternative investments such as commodities increases. An example fo this is the period of Stagflation that occurred during the 1970s and which led to an economic bubble forming in precious metals.

War, invasion, looting, crisis

In times of national crisis, people fear that their assets may be seized and that the currency may become worthless. They see gold as a solid asset which will always buy food or transportation. Thus in times of great uncertainty, particularly when war is feared, the demand for gold rises.

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Value of the US DollarThe value of currency goes down, either because of inflation or a weak US Dollar on the currency exchange, driving the price of gold higher. When the dollar is weak, traders prefer to invest in gold on the other hand, a strong US dollar is likely to drive the price of gold lower and more controlled.

Economy Uncertainty

It’s also a major factor. During times of recession, traders tend to invest in gold because of its enduring value. Gold is often considered a relatively safe investment during uncertain times. When the expected or actual returns on bonds and stocks decline, the interest in gold trading goes up, driving gold price higher.

GOLD INVESTMENT STRATEGIES

Many investors base their investment decisions on various types of Technical analysis. Typically gold involves looking at past price patterns, and trying to draw a conclusion as to the future price trend this might include any of the following strategies:

Using leverage: Bullish investors may choose to leverage their position by borrowing money against their existing (gold) assets and then purchasing (more) gold on account with the loaned funds. This technique is referred to as a carry trade. Leverage is also an integral part of buying gold derivatives and unhedged gold mining company shared (see gold mining companies). Leverage via carry trades or derivatives may increase investment gains but also increases the corresponding risk of capital loss if when the trend reverses.

Price speculation: Since April 2001 the gold price has more than tripled in value against the US dollar, prompting speculation that the long secular bear market (or the Great Commodities Depression) has ended and a bull market has returned. A World Gold Council report released on February 18, 2008 showed physical gold demand rose sharply in the second half of 2008.

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Charting: In charting price patterns are used to represent buy or sell

indicators, usually because a similar was seen before. The criticism is that

charts are open to varying interpretations, and it is often only possible to see

the pattern after the price move has occurred.

Buy low, sell high: The investor believes the price will revert to a previous

level, thus he will buy after a fall and sell after a rise. The assumption is thus

that the present price is wrong, and the previous price must have been the right

one.

Buy on breakout: The investor looks for a previous price peak or summit,

from which the gold price subsequently declined. This price is known as a

resistance point, and the assumption is that it represents a price at which more

sellers than buyers appear. The more times the gold price reaches the resistance

level, and the more time it spends there, the stronger the resistance is thought

to be. When finally the price breaks-out to a higher level than the resistance

point, it is assumed that there are no sellers left, and that the price can only

rise. The previous resistance level is assumed to become a support level, blow

which the gold price will not fall.

Momentum trading: The assumption is that the price trend is likely to

continue in the same direction as the recent days, weeks, months, or years.

However in order to determine how likely it is that the trend will continue, the

investor will employ a variety of techniques to determine the strength of the

existing trend. For example, the investor may build a relative strength indicator

by multiplying recent price changes by volume, and possibly giving more

weight to recent price changes than older ones. Moving averages may be

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constructed, which would have given accurate buy and sell signals in the past

(e.g. “buy when the 45 day moving average turns up, sell when it turns down”).

Multiple moving average may be used (e.g. “buy when the 20 day moving

average moves above the 50 day moving average”).

Fundamental analysis

Investors using fundamental analysis analyze the macroeconomic situation,

which includes international economic indicators, such as GDP growth rates,

inflation, interest rates, productivity and energy prices. They would also

analyze the yearly global gold supply versus demand. Over 2005 the World

Gold Council estimated yearly global gold supply to be 3,859 tonnes and

demand to be 3,754 tonnes, giving a surplus of 105 tonnes. While gold

production is unlikely to change in the near future, supply and demand due to

private ownership is highly liquid and subject to rapid changes. This make gold

very different from almost every other commodity.

COMMON THINGS TO MONITOR ON FUNDAMENTALS ARE:

World Central Bank Policies.

Economic meetings: G20, NAFTA, GATT, IMF, World Bank etc.,

Major economic & political news

Most commonly used Economic indicators in Fundamental:

Gross Domestic Product (GDP)

Key interest rates, Tight/Loose Money policy

35

Consumer Price Index (CPI) and Producer Price Index (PPI)

Unemployment level / Jobless claims

Trade balance / Balance of payments

Technical analysis

Technical analysis is the study of past price and activity history in order to

predict future price movements. As with stocks, gold investors may base their

investment decision partly on, or solely on, technical analysis. Typically, this

involves analyzing chart patterns, moving averages, market trends and the

economic cycle in order to speculate on the future price.

Components of technical analysis:

Price, Charts, Patterns, Trend study.

Technical indicators.

Support and Resistance levels.

SIX REASONS FOR INVESTORS TO OWN GOLD:

Take a look at the following summary of the six primary reasons for investors to

own gold. They may never be more relevant than they are today.

1. HEDGE AGAINST INFLATION

Gold renowned as a hedge against inflation. The most consistent factor

determining the price of gold has been inflation – as inflation goes up, the price

of gold goes up along with it. Today, a number of factors are conspiring to

36

create the perfect inflationary storm: extremely simulative monetary policy, a

major tax cut, a long term decline in the dollar, a spike in oil prices, and a

mammoth trade deficit. Almost across the board, commodity prices are up

despite the short-term absence of a weakening dollar which is often viewed as

the principal reason for stronger commodity prices.

Oil, Inflation and Gold

Although the prices of gold and oil don’t exactly mirror one another, there is no

question that oil prices do affect gold prices. If oil prices rise or fall sharply,

investors can expect a corresponding reaction in gold prices, often with a lag.

2. GOLD – HEDGE AGAINST A DECLINING DOLLAR

Gold is bought and sold in U.S dollars, so any decline in the value of the dollar

causes the price of gold to rise. The U.S. dollar is the world’s reserve currency

– the primary medium for international transactions, the principal store of value

for savings, the currency in which the worth of commodities and equities are

calculated, and the currency primarily held as reserves by the world’s central

banks. However, now that it has been stripped of its gold backing, the dollar is

nothing more than a fancy piece of paper.

3. GOLD AS A SAFE HAVEN

Despite the fact that the United States is the world’s only remaining

superpower, there are a myriad of problems festering around the world, any one

of which could erupt with little wringing. Gold has often been called the “crisis

commodity” because it tends to outperform other investments during periods of

world tension. The very same factors that cause other investments to suffer

cause the price of gold to rise. A bad economy can sink poorly run banks. Bad

37

banks can sink an entire economy. And, perhaps most importantly to the rest of

the world, the integration of the global economy. And, perhaps most

importantly to the rest of the world, the integration of the global economy has

made it possible for banking and economic failures to destabilize the world

economy.

As banking crises occur, the public begins to destruct paper assets and turns to

gold for a safe haven.

When all else fails, governments rescue themselves with the printing press,

making their currency worth less and gold worth more. Gold has always raised

the most when confidence in government is at its lowest.

4. GOLD – SUPPLY AND DEMAND

First, demand is outpacing supply across the board. Gold production is

declining, copper production is declining; the production of lead and other

metals is declining. It is very difficult to open new mines when the whole

process takes about seven years on average, making it hard to address the

supply issue quickly. Gold output in South Africa, the world’s largest gold

producer, fell to its lowest level since 1931 this past year as the rand’s gains

prompted Harmony Gold Mining Co. and rivals to close mines despite 16 year

highs in the gold price.

Another Key Reason to Own Gold: Growing Demand – China, India and Gold

India is the largest gold-consuming nation in the world. China, on the other

hand, has the fastest-growing economy in modern history. Both India and

China are in the process of liberalizing laws relating to the import and sale of

gold in ways that will facilities gold purchases on the mammoth scale.

38

China is teaching the West something new. Its economy, growing at 9 percent

per year, is expected to become the second largest in the world by 2020, behind

only the United Stated. In Last 2 years Americans spent $ 162 billion more on

Chinese goods than the Chinese spent on U.S. products. That gap has been

growing by more than 25 percent per year. China’s consumer class, meanwhile,

is spending on everything from bagels to Bentleys – and will soon outnumber

the entire U.S. population. China’s explosive growth “could be the dominant

event of this century,” says Stapleton Roy, former U.S. ambassador the China.

“Never before has a country risen as fast as China is doing”

5. GOLD – STORE OF VALUE

One major reason investors look to gold as an asset class in because it will

always maintain an intrinsic value. Gold will not get lost in an accounting

scandal or a market collapse. Economist Stephen Harmston of Bannock

Consulting had this to say in a 1998 report for the World Gold Council,

“..Although the gold price may fluctuate, over the very long run gold has

consistently reverted to its historic purchasing power parity against other

commodities and intermediate products. Historically, gold has proved to be an

effective preserver of wealth. It has also proved to be a safe haven in times of

economic and social instability. In a period of a long bull run in equities, with

low inflation and relative stability in foreign exchange markets, it is tempting

for investors to expect continual high rates of return on investments. It

sometimes takes a period of falling stock prices and market turmoil to focus the

mind on the fact that it may be important to invest part of one’s portfolio in an

asset that will, at least, hold its value.”

39

6. A CRITICAL REASON ON WHY IT’S IMPORTANT TO OWN

GOLD – PORTFOLIO DIVERSIFIER

The most effective way to diversifying the portfolio and protect the wealth

created in the stock and financial markets is to invest in assets that are

negatively correlated with those markets, such as DSP Black Rock World Gold

& AIG World Gold. Gold is the ideal diversifier for a stock portfolio, simply

because it is among the most negatively correlated assets to stocks.

Investment advisors recognize that diversification of investments can improve

overall portfolio performance. The key to diversification is finding investments

that are not closely correlated to one another. Because most stocks are relatively

closely correlated and most bonds are relatively closely correlated with each

other and with stocks, many investors combine tangible assets such as gold with

their stock and bond portfolios in order to reduce. Gold and other tangible

assets have historically had a very low correlation to stocks and bonds.

Although the price of gold can be volatile in the short-term, gold has

maintained its value over the long-term, serving as a hedge against the erosion

of the purchasing power of paper money. Gold is an important part of a

diversified investment portfolio because its price increases in response to events

that erode the value of traditional paper investments like stocks and bonds.

DIFFERENT AVENUES TO INVEST IN GOLD.

Investment in gold can be done directly through ownership, or indirectly

through certificates, accounts, spread betting, derivatives or shares.

1. Gold Bars or Coin: Investment in gold should be either in gold coins or bars.

However, it should always be bought from banks which certify the equality of

40

gold. Moreover, only buy government-certified gold coins or bars and

preferably the purity level should be 99.9 as they are easy to sell. The biggest

drawback of this investment is either the risk of carrying them at home (as

unsafe option) or pay the bank to store it. Gold bars or coins are risky as well as

expensive.

2. Gold Certificates: Gold certificates allow gold investors to avoid the risks and

costs associated with the transfer and storage of physical bullion (such as theft,

large bid-offer spread, and metallurgical assay costs) by taking on a different set

of risks and costs associated with the certificate itself (such as commissions,

storage fees, and various types of credit risk).

3. Gold Futures: Gold contracts are the hottest commodities traded in the

commodity market. Gold has become one of the largest traded commodities in

global futures market as a large number of traders are taking delivery of the

yellow metals through the futures route.

4. Gold ETFs: We may not be able to touch and feel Yellow metal through ETFs,

but they are perhaps the safest method of buying and owning gold. ETF stands

for Exchange Traded Funds. These are generally open-ended funds i.e. they are

traded on the exchange just like stocks.

5. Jewelry: Buying jewelry is not the same as investing in gold because it is not

made up from 24 carat gold as it is quite brittle. Moreover, when you sell

jewelry some deductions are made to the jewelry because of its imperfection

and age. Also, this is not as liquid as other pure gold related investments such as

41

coins, bars and ETFs. However, investment in jewelry should be considered

mostly as an emotional one!

6. Gold Mining Stocks: Stock ownership of a company traded on one of the

exchanges. The price movement is dependent not only upon the price of gold,

but also upon the future of the corporation and management. It’s price

movement is almost always more than the movement of gold itself. Market

Vectors Gold Miners ETF (GDX) is one way to invest in stocks.

7. Gold Mutual funds: A relatively safe method of buying and owning gold

stocks allows the owner to diversify among many stocks and allows the

investing decisions to be made by a professional. Investment methods vary

among funds and provide many different styles of portfolio management for an

investor to choose from. Prices move faster and further in both direction than

the price of gold. There are quite few gold mutual funds in India.

8. Gold CFDs: contract for difference is a contract between two parties,

typically described as “buyer” and “seller”, stipulating that the seller will pay to

the buyer the difference between the current value of an asset and its value at

contract time. (If the difference is negative, then the buyer pays instead to the

seller.) In effect CFDs are financial derivatives that allow traders to take

advantage of prices moving up (long positions) or prices moving down (short

positions) on underlying financial instruments and are often used to speculate

on those markets.

42

A. INTRODUCTION TO THE TOPIC

Technical analysis is technique to predict or forecast the future price of stocks

based on an examination of past price movements. Technical analysis does not

result in absolute predictions about the future. Instead technical analysis can

help investors anticipate what is “likely” to happen to prices over time.

Technical analysis uses a wide variety of charts and quantitative techniques that

shows price over time. Technical analysis is applicable to stocks, indices,

commodities, futures or any tradable instrument where the price is influenced

by the forces of supply and demand. Price refers to any combination of the

open, high, low, or closes for a given commodity over a specific time frame.

The time frame can be based on intraday (10minute, 5-minutes, 10-minutes, 15-

minutes, 30-minutes or hourly), daily, weekly or monthly price data and last a

few hours or many years.

Technical analysis is the process of analyzing a commodities historical price in

an effort to determine probable future prices. This is done by comparing current

price action (i.e., current expectations) with comparable historical price action

to predict a reasonable outcome. Technical analysis is the name given to

forecasting techniques that utilizes historical gold price data.

The roots of modern-day technical analysis stem from the Dow Theory

developed around 1900 by Charles Dow. His focus on the basis of security

price movement gave rise to a completely new method of analyzing the

markets.

43

B. STATEMENTS OF THE PROBLEM

“Gold Emerging as a new asset of an investment.”

Prices of gold on the commodity market fluctuate daily on account of buying

and selling. Gold prices always keep changing and they never stable. This kind

of fluctuations can be predicted in various manner like fundamental analysis,

but it is time consuming and requires lot of information.

This study makes a critical analysis of the gold price fluctuations and it is an

alternative approach to study the gold price behavior using technical analysis

indicators. The study mainly aims at minimizing the risk existing in the market

using technical analysis indicators and also shows whether these technical

analysis indicators can guide us in making effective selling and buying

decisions.

C. OBJECTIVE OF THE STUDY

1. To study the fluctuations in the gold prices using the mathematical

indicators.

2. To analyze whether technical analysis indicators can be used to guide buying

and selling decisions in commodity market.

3. To identify whether past gold price movements have any impact on the

present gold prices.

4. To identify the effectiveness of Technical analysis in predicting the future

gold prices.

D. SCOPE OF THE STUDY:

This study was carried out in Harvest Futures India Pvt. Ltd. The study has

been conducted using the past gold prices of three years using technical

44

indicators like RSI, MACD and STOCHASTICS. This study aims at the trading

of gold in the commodity market using some technical indicators. This report

gives the information to the investor when to buy and sell the gold in the

commodity market.

2. RESEARCH METHODOLOGY:

The project was done at Harvest Futures Consultants India Pvt. Ltd. The

study conduct is quantitative in nature; only quantitative data are marshaled

to support the assumption.

Source of data

The data collected are mainly secondary in nature because the analysis

mainly requires the gold prices for last year which is provided by the

company. The relevant secondary data is also collected from the branch

office and from well known publications.

Research Design

The methodology adapted pertains to exploratory research design as it

mainly depends on the secondary data. An exploratory research focuses on

the discovery of ideas and is generally based on Secondary Data. It is

preliminary investigation, which does not have a rigid design. The present

study is designed to examine the efficiency and effectiveness of technical

analysis indicators for forecasting the changes in the gold prices.

45

LIMITATIONS OF THE STUDY

Due to time constraint study confined to only 3 Technical analysis

indicators.

Using only 3 Technical analysis indicators may not give the required

result.

Data analysis for a short time may not give accurate results.

The study is mainly based on the secondary data. As such it is subject

to the limitations of the secondary data.

3. DATA ANALYSIS AND INTERPRETATION

The study was conducted using gold prices of past 3 years and has been

analyzed using 3 technical analysis indicators.

1. RELATIVE STRENGTH INDEX (RSI)

2. MOVING AVERAGE CONVERGENCE / DIVERGENCE (MACD)

3. STOCHASTICS

RELATIVE STRENGTH INDEX (RSI)

Relative Strength Index (RSI) is a technical momentum indicator that

compares the magnitude of recent gains to recent losses in an attempt to

determine overbought and oversold conditions of an asset. The Relative

Strength Index (RSI) is one of the most popular overbought/oversold

(OB/OS) indicators. The RSI was developed in 1978 by Welles Wilder. The

RSI is basically an internal strength index which is adjusted on a daily basis

by the amount by which the market rose or fell. A high RSI occurs when the

market has been rallying sharply and a low RSI occurs when the market has

been selling off sharply. The RSI values range from zero to 100. One

characteristic of the RSI is that it moves slower when it reaches very

46

overbought or oversold conditions and then snaps back very quickly when

the market enters even a mild correction. This brings the RSI back to more

neutral levels and indicates that the price trend may be able to resume.

Welles Wilder originally used a 14-day RSI and the 14-day parameter is still

used by many traders. However, the 9-day RSI appears to have gained more

adherents because it is somewhat faster and more sensitive. The

overbought/oversold levels for the 9-day RSI are 80/20, as compared with

60/40 for the 14-day RSI. The RSI should not be confused with the relative

strength indicator which is commonly used in the stock market to assess the

relative strengths between different stocks or between a stock and a stock

index. Wilder’s name “relative strength index” is actually somewhat

misleading in that the RSI is not “relative” to anything else but is simply an

internal strength index.

The general formula for the RSI is:

RSI = 100- [100/ (1+RS)],

Where RS = average gain per day / average loss per day

The RS value is updated each day by multiplying both the up and down

average by 13, adding the current day’s up, down or zero amount to the

appropriate average and then dividing each by 14. The new RS value is then

put into the RSI formula. This procedure produces a smoothing effect

because it drops an average value from the price average each day rather

than the actual price of 14 days ago. The RSI calculation includes data going

back to the beginning of the contract but is weighted towards the most recent

14 days. This is the consequence of the exponential averaging which is used

in the calculation. Thus, the RSI in the first 14 days of trading in a contract

47

is very erratic and reaches extreme levels and should therefore be ignored.

The RSI calculation does not become sufficiently accurate until about 30

days of data are available.

Another consequence of the exponential weighting of the RSI formula

is that one cannot simply use the last 14-days of price data in the formula

and produce and accurate RSI value. Rather, one must begin the calculation

in the first 14-days of the contract and then continuously update it from

there.

Trading Uses

There are two basic ways to use the RSI, (1) as an overbought

/oversold indicator, and (2) as a way to spot divergences between the

movement of the RSI and the price of the underlying instrument.

(1) RSI as an Overbought/Oversold Indicator – As an OB/OS

indicator, a 14-days RSI value approaching 60 means that the market is

overbought, i.e., the price is very high and almost everyone interested in this

contract has already taken a position so that there are very few traders left to

maintain buying pressure to push the price higher. There is also the

possibility that because the price is so high, weak longs will begin to get out

of the market. While the indicator by itself is not enough to trigger an

automatic sell signal, it is a warning to be alert for any hint that long

liquidation selling is beginning.

Conversely, a 14-days RSI value under 40 means that the market is

oversold, i.e., the price is very low and almost everyone interested in this

contract has either liquidated his position or has entered a short position,

suggesting that there are very few sellers left to maintain the downward

48

pressure on the contract. There is also the possibility that because the price is

so low, new buying will soon begin to take place. The RSI is very useful for

gaining an overview of the overbought / oversold condition of the market. It

should not be used in isolation as trading single, however. When the RSI

rallies to 60, for example, the market is in a strong bullish trend and a trader

who enters a new short position simply because the RSI is at 60 is trading

against a strong bull trend. Rather, a trader watching a market with an RSI of

60 should perhaps wait for a better buying opportunity and possibly

liquidate some of the long positions he/she may already own. If the trader is

bearish on a market with an RSI of 60, he/she should at least wait to enter a

short position unit he/she gets some other indication that the bull trend is

reversing, such as an outside-day-down reversal pattern or a breakdown in a

trend-following indicator. Overbought/oversold indicators are useful tools

when used in conjunction with other indicators, but are somewhat dangerous

when used alone.

(2) RSI and Divergence with Price Movement – Another effective

use of the RSI is to watch for divergences between the RSI and the price of

the underlying instrument. For example, when prices have rallied to a new

high but the RSI cannot rally to a comparable new high, then a divergence

occurs. The weakness of the RSI is showing that prices are not as strong as

they were during the previous rally and that the upward trend may therefore

be warning.

MOVING AVERAGE CONVERGENCY/DIVERGENCE (MACD)

49

The MACD is calculated by subtracting a 26-day moving average of a

security’s price from a 12-day moving average of its price. The result is an

indicator that oscillates above and below zero. When the MACD is above zero, it

means the 12-day moving average is higher than the 26-day moving average. This

is bullish as it shows that current expectations (i.e., the 12-days moving average)

are more bullish than previous expectations (i.e., the 26 day average). This implies

a bullish, or upward, shift in the supply/demand lines.

When the MACD falls below zero, it means that the 12-day moving average

is less than the 26-day moving average, implying a bearish shift in the

supply/demand lines. A 9-day moving average of the MACD (not of the security’s

price) is usually plotted on top of the MACD indicator. This line is referred to as

the “signal” line. The signal line anticipates the convergence of the two moving

averages (i.e., the movement of the MACD toward the zero line).

The MACD is the difference between two moving averages of price. When

the – term moving average rises above the longer-term moving averages (i.e., the

MACD rises above zero), it means that investor expectations are becoming more

bullish (i.e., there has been an upward shift in the supply/demand lines). By

plotting a 9-day moving average of the MACD, we can see the changing of

expectations (i.e., the shifting of the supply/demand lines) as they occur. The

MACD is the difference between two moving averages of price. When the shorter-

term moving average rises above the longer-term moving average (i.e., the MACD

rises above zero), it means that investor expectations are becoming more bullish

(i.e., there has been an upward shift in the supply/demand lines). By plotting a 9-

days moving average of the MACD, we can see the changing of expectations (i.e.,

the shifting of the supply/demand lines) as they occur.

50

STOCHASTICS

Developed by George C. Lane in the late 1950s, The Stochastic Oscillator

Technical Indicator compares where a security’s price closed relative to its price

range over a given time period. The Stochastic Oscillator is displayed as two lines.

The main line is called %K. The second line, called %D, is a Moving Average of

%K. The %K line is usually displayed as a solid line and the %D line is usually

displayed as a dotted line.

There are several ways to interpret a Stochastic Oscillator. Three popular methods

include:

Buy when the Oscillator (either %K or %D) falls below a specific level (e.g.,

20) and then rises above that level. Sell when the Oscillator rises above a

specific level (e.g., 80) and then falls below that level;

Buy when the %K line rises above the %D line and sell when the %K line falls

below the %D line;

Look for divergences. For instance: where prices are making a series of new

highs and the Stochastic Oscillator is failing to surpass its previous highs.

CALCULATION

%K=100* (recent close-lowest low (n)/highest high (n)-lowest low (n))

%D=3-period moving average of %K

(n)=Number of periods used in calculation

Table 1:- DAILY CLOSING PRICES OF GOLD AS ON 2011

Date Closing Date Closing Price Date Closing Price

51

Price2011.01.03

1414.4 2011.03.02 1434.1 2011.05.02 1544.5

2011.01.04

1308.4 2011.03.03 1415.7 2011.05.03 1535.6

2011.01.05

1378 2011.03.04 1429.5 2011.05.04 1516.3

2011.01.06

1371.2 2011.03.07 1431.7 2011.05.05 1473.4

2011.01.07

1369.5 2011.03.08 1428.6 2011.05.06 1494

2011.01.10

1375.4 2011.03.09 1430.4 2011.05.09 1512.8

2011.01.11

1381.2 2011.03.10 1411.9 2011.05.10 1515.5

2011.01.12

1387.7 2011.03.11 1417.8 2011.05.11 1500.3

2011.01.13

1373.3 2011.03.14 1428.3 2011.05.12 1506.5

2011.01.14

1361.7 2011.03.15 1395.2 2011.05.13 1493.5

2011.01.17

1361.3 2011.03.16 1399.7 2011.05.16 1489.9

2011.01.18

1368 2011.03.17 1404.1 2011.05.17 1486.6

2011.01.19

1369.6 2011.03.18 1419.6 2011.05.18 1496.8

2011.01.20

1345.8 2011.03.21 1426.7 2011.05.19 1496.4

2011.01.21

1342.2 2011.03.22 1429.5 2011.05.20 1513

2011.01.24

1333.9 2011.03.23 1437.9 2011.05.22 1512.6

2011.01.25

1332.1 2011.03.24 1430.8 2011.05.23 1517.1

2011.01.26

1345.6 2011.03.25 1428.5 2011.05.24 1526

2011.01.27

1313.6 2011.03.28 1420.3 2011.05.25 1525.7

52

2011.01.28

1336.3 2011.03.29 1418.5 2011.05.26 1518.5

2011.01.31

1332.5 2011.03.30 1423.7 2011.05.27 1535.9

2011.02.01

1341 2011.03.31 1432.1 2011.05.29 1536.1

2011.02.02

1334.9 2011.04.01 1428.6 2011.05.30 1538.4

2011.02.03

1354 2011.04.04 1434.3 2011.05.31 1535.2

2011.02.04

1348.7 2011.04.05 1456.1 2011.06.01 1540.6

2011.02.07

1350.9 2011.04.06 1458.8 2011.06.02 1533.4

2011.02.08

1363.5 2011.04.07 1458.2 2011.06.03 1541.2

2011.02.09

1363.3 2011.04.08 1473.9 2011.06.05 1542.2

2011.02.10

1363.5 2011.04.11 1463.1 2011.06.06 1543.8

2011.02.11

1355.9 2011.04.12 1453.3 2011.06.07 1544.3

2011.02.14

1361.5 2011.04.13 1457.5 2011.06.08 1535.1

2011.02.15

1373.5 2011.04.14 1474.3 2011.06.09 1544.1

2011.02.16

1374.1 2011.04.15 1486.5 2011.06.10 1531.7

2011.02.17

1383.7 2011.04.18 1495.4 2011.06.12 1531.9

2011.02.18

1387.4 2011.04.19 1494.8 2011.06.13 1515.7

Date Closing price

Date Closing price Date Closing price

2011.02.21

1406.2 2011.04.20 1502 2011.06.14 1523.6

2011.02.22

1398.8 2011.04.21 1504 2011.06.15 1530.1

2011.02.2 1411.5 2011.04.25 1506.9 2011.06.16 1528.9

53

32011.02.24

1402.4 2011.04.26 1506.7 2011.06.17 1539

2011.02.25

1409 2011.04.27 1526.3 2011.06.19 1538.8

2011.02.28

1411.2 2011.04.28 1535.2 2011.06.20 1544.4

2011.03.01

1433 2011.04.29 1561.4 2011.06.21 1548.6

2011.06.22 1547.5 2011.08.11 1765.5 2011.10.06 1650.32011.06.23 1521.8 2011.08.12 1745.4 2011.10.07 1637.42011.06.24 1502.2 2011.08.15 1765.5 2011.10.10 1675.42011.06.26 1501.8 2011.08.16 1786.4 2011.10.11 1662.92011.06.27 1496.7 2011.08.17 1788.3 2011.10.12 1675.12011.06.28 1501.7 2011.08.18 1824.3 2011.10.13 1666.42011.06.29 1511.3 2011.08.19 1851.1 2011.10.14 16802011.06.30 1500.7 2011.08.21 1853.1 2011.10.16 1682.32011.07.01 1486.9 2011.08.22 1897.9 2011.10.17 1670.22011.07.03 1486.5 2011.08.23 1830.4 2011.10.18 1654.82011.07.04 1495.2 2011.08.24 1752.4 2011.10.19 16432011.07.05 1516 2011.08.25 1773.1 2011.10.20 16192011.07.06 1529.1 2011.08.26 1823.3 2011.10.21 1639.52011.07.07 1532 2011.08.29 1788 2011.10.24 1652.82011.07.08 1542.3 2011.08.30 1835.3 2011.10.25 1705.12011.07.10 1544 2011.08.31 1825 2011.10.26 1725.32011.07.11 1554.1 2011.09.01 1825 2011.10.27 1744.92011.07.12 1567.5 2011.09.02 1881.5 2011.10.28 1743.52011.07.13 1582.3 2011.09.05 1899.5 2011.10.30 17422011.07.14 1587.1 2011.09.06 1873.1 2011.11.31 1714.72011.07.15 1593 2011.09.07 1817.2 2011.11.01 1719.72011.07.18 1605.1 2011.09.08 1869 2011.11.02 1736.52011.07.19 1588.6 2011.09.09 1858.6 2011.11.03 1764.62011.07.20 1601.8 2011.09.12 1814 2011.11.04 1754.82011.07.21 1589.8 2011.09.13 1833.9 2011.11.07 1794.92011.07.22 1602.3 2011.09.14 1820.7 2011.11.08 1785.92011.07.24 1599.7 2011.09.15 1789.4 2011.11.09 1769.62011.07.25 1614.3 2011.09.16 1809.3 2011.11.10 1758.1

54

Date Closing price

Date Closing price

Date Closing price

2011.07.26 1619.9 2011.09.18 1811.8 2011.11.11 1787.72011.07.27 1613.7 2011.09.19 1778.4 2011.11.14 1780.22011.07.28 1617.9 2011.09.20 1803.8 2011.11.15 1780.52011.07.29 1625.4 2011.09.21 1780.1 2011.11.16 1763.22011.07.31 1626.6 2011.09.22 1737.1 2011.11.17 1721.42011.08.01 1619.6 2011.09.23 1650.3 2011.11.18 1723.52011.08.02 1659.7 2011.09.26 1627.7 2011.11.21 16772011.08.03 1661.1 2011.09.27 1649.7 2011.11.22 1699.52011.08.04 1648.5 2011.09.28 1609.1 2011.11.23 16922011.08.05 1661.7 2011.09.29 1615.1 2011.11.24 1696.52011.08.07 1665.6 2011.09.30 1622.9 2011.11.25 1683.12011.08.08 1716.9 2011.10.03 1660.9 2011.11.28 1711.92011.08.09 1743.8 2011.10.04 1624.6 2011.11.29 1715.42011.08.10 1794.7 2011.10.05 1641.8 2011.11.30 1746

55

Date Closing Price

2011.12.01 1744.62011.12.02 1745.6

2011.12.05 1722.6

2011.12.06 17282011.12.07 1741.7

2011.12.08 1708.12011.12.09 1710.7

2011.12.12 1666.22011.12.13 1631.3

2011.12.14 1573.82011.12.15 1570.2

2011.12.16 1597.1

2011.12.19 1593.92011.12.20 1615.6

2011.12.21 1614.92011.12.22 1605.9

2011.12.23 1607.42011.12.26 1607.2

2011.12.27 1592.7

2011.12.28 1556.42011.12.29 1545.4

2011.12.30 1562.9

Table 1.1:- ANALYSIS USING RSI INDICATORDAYS RSI DAYS RSI DAYS RSI1 44 69.30092 87 69.560472 45 59.55707 88 59.895853 46 63.68151 89 45.506494 47 64.30646 90 51.52835 48 62.67003 91 56.276946 49 63.25474 92 56.929547 50 53.90876 93 52.205438 51 56.13472 94 53.886349 52 59.8509 95 49.921810 53 46.48228 96 48.8499811 54 48.17704 97 47.8361112 55 49.84933 98 51.2070213 56 55.31916 99 51.0676514 57 57.6004 100 56.3742315 58 58.50027 101 56.2160316 21.16613 59 61.16324 102 57.6557117 19.75571 60 57.78787 103 60.4271918 19.45296 61 56.69633 104 60.2839619 28.32449 62 52.86259 105 56.8039820 22.10852 63 52.03088 106 62.4459721 33.29219 64 54.26933 107 62.50659

56

22 32.45219 65 57.70297 108 63.2414323 36.32249 66 55.82223 109 61.4372624 34.78225 67 58.21105 110 63.3379925 42.941 68 65.82277 111 59.1515826 41.39355 69 66.6334 112 62.0759927 42.32269 70 66.25731 113 62.4471828 47.46025 71 70.88765 114 63.0700129 47.38809 72 64.34633 115 63.2749930 47.47409 73 59.0239 116 57.0051431 44.49754 74 60.53069 117 61.0691832 47.12806 75 65.92787 118 53.5576733 52.34067 76 69.21955 119 53.6566834 52.59234 77 71.39093 120 45.242935 56.54617 78 71.02716 121 49.4090736 58.00006 79 72.81715 122 52.6043337 64.49956 80 73.31041 123 51.95197Days RSI Days RSI Days RSI38 60.52899 81 74.04585 124 56.8071339 64.5611 82 73.89462 125 56.6849840 59.84377 83 78.52379 126 59.3224341 62.01178 84 80.23748 127 61.2291942 62.73403 85 84.22748 128 60.4302343 69.01955 86 73.8676 129 45.49391

130 37.81704 173 74.95983 216 46.18389131 37.67731 174 75.16211 217 44.97385132 35.85805 175 78.67687 218 47.29839133 38.96938 176 80.8858 219 47.70077134 44.53262 177 81.00225 220 45.72294135 40.17766 178 84.11502 221 43.26419136 35.33319 179 66.44881 222 41.42597137 35.2007 180 52.68014 223 37.89893138 40.43248 181 55.32573 224 42.40935139 50.68414 182 61.01772 225 45.19069140 55.83899 183 55.64845 226 54.497141 56.83899 184 60.64562 227 57.49865142 60.57882 185 59.08445 228 60.23936143 61.16612 186 59.08445 229 59.94202144 64.54567 187 64.84219 230 59.60257

57

145 68.46659 188 66.46145 231 53.64789146 72.13233 189 61.95449 232 54.54363147 73.21968 190 53.65723 233 57.51444148 74.53785 191 59.12069 234 61.9892149 77.02684 192 57.65115 235 59.63035150 67.34854 193 51.7145 236 65.42754151 70.53786 194 53.99106 237 63.23278152 64.3812 195 52.23191 238 59.34971153 67.55769 196 48.21989 239 56.704154 66.23456 197 50.80705 240 61.46551155 69.81018 198 51.13735 241 59.67477156 71.0754 199 46.63245 242 59.72532157 67.69291 200 50.22367 243 55.41184158 68.77692 201 47.04272 244 46.64591159 70.6695 202 41.86218 245 47.0987160 70.97267 203 33.77626 246 39.17164161 66.64514 204 32.04091 247 44.07635162 75.76248 205 35.51418 248 42.83645163 76.00904 206 32.23951 249 43.85695164 69.18737 207 33.21951 250 41.48214165 72.02042 208 34.54483 251 47.99948166 72.8157 209 40.71746 252 48.74656167 80.61918 210 37.11663 253 54.85345168 83.32262 211 39.83179 254 54.5333169 87.01388 212 41.18335 255 54.73651170 76.54884 213 39.72492 256 49.28084171 70.27978 214 45.81248 257 50.52761172 72.68789 215 44.23001 258 53.64116

DAYS RSI259 45.99554260 46.62946261 38.33525262 33.32826

58

263 27.05781264 26.71887265 33.42927266 33.42927267 38.26889268 38.16539269 36.78771270 37.19463271 37.16028272 34.66113273 29.23111274 27.94154275 33.3855

GRAPH: - 01

59

INTERPRETATION

When the RSI value crosses 80, the prices were high. It indicates an overbought condition. There was a high buying pressure at this point therefore the prices started falling. At this point investors can make decision to sell.

When the RSI value falls below 20, prices were low. It indicates an oversold condition. There was a high selling pressure at this poiint therefore the prices started rising. At these point investors can make decision to buy.

Hence the RSI value of GOLD in 2012 is now at the equilibirum position, the investors should hold and watch the movement of the trend line until it reach overbought or oversold condition.

Table 1.2:- ANALYSIS USING MACD INDICATOR DAYS

MACD

SIGNAL LINE

DAYS

MACD

SIGNAL LINE

DAYS

MACD

SIGNAL LINE

1 41 9.62 2.17 81 29.27 22.912 42 11.60 3.22 82 30.74 23.783 43 13.36 4.34 83 32.35 24.734 44 14.04 5.42 84 34.83 25.865 45 15.21 6.51 85 36.15 27.006 46 16.30 7.60 86 36.85 28.097 47 17.06 8.65 8 36.43 29.028 48 17.76 9.66 88 34.02 29.589 49 17.49 10.53 89 32.71 29.9210 50 17.46 11.30 90 32.29 30.1911 51 17.85 12.03 91 31.95 30.3812 52 16.65 12.54 92 30.85 30.4313 53 15.74 12.90 93 30.07 30.3914 54 15.08 13.14 94 28.70 30.2115 55 25.16 13.36 95 27.24 29.8816 56 15.49 13.60 96 25.72 29.4117 57 15.86 13.85 97 24.75 28.9018 58 16.51 14.15 98 23.80 28.3319 59 16.71 14.43 99 23.63 27.8120 60 16.73 14.69 100 23.39 27.32

60

21 61 16.33 14.87 101 23.30 26.8722 62 15.84 14.98 102 23.55 26.5023 63 15.59 15,05 103 23.68 26.1924 64 15.70 15.12 104 23.40 25.8825 65 15.59 15.17 105 23.85 25.6526 -5.66 66 15.70 15.23 106 24.19 25.4927 -4.94 67 16.72 15.40 107 24.51 25.3828 -4.29 68 17.69 15.65 108 24.57 25.2929 -3.69 69 18.46 15.96 109 24.78 25.2430 -3.50 70 19.79 16.39 110 24.57 25.1631 -3.07 71 20.41 16.83 111 24.66 25.1132 -2.14 72 20.45 17.24 112 24.70 25.0633 -1.28 73 20.61 17.61 113 24.672 25.0234 -0.10 -3.18 74 21.43 18.04 114 24.69 24.9935 1.12 -2.71 75 22.64 18.55 115 24.17 24.9036 3.03 -2.07 76 24.03 19.16 116 24.04 24.8037 4.37 -1.35 77 25.16 19.82 117 23.29 24.6338 6.11 -0.53 78 26.39 20.55 118 22.56 24.4039 7.21 0.33 79 27.48 21.32 119 21.12 24.0440 8.45 1.24 80 28.48 22.12 120 20.14 23.61

121 19.50 23.15 161 32.03 23.82 201 45.60 62.37122 18.82 22.67 162 33.74 24.92 202 37.11 59.56123 18.62 22.22 163 34.57 25.99 203 28.50 56.124 18.37 21.79 164 35.79 27.08 204 21.80 52.30125 18.34 21.41 165 36.92 28.17 205 14.00 48.04126 18.44 21.08 166 40.11 29.50 206 7.35 43.52127 18.43 20.78 167 43.99 31.11 207 1.82 38.89128 17.20 20.39 168 49.55 33.16 208 -1.36 34.42129 15.19 19.81 169 52.99 35.36 209 -5.78 29.95130 13.34 10.09 170 54.95 37.54 210 -8.89 25.63131 11.45 18.24 171 57.40 39.75 211 11.22 21.54132 9.96 17.32 172 60.31 42.03 212 13.82 17.61133 0.06 16.40 173 62.78 44.34 213 -14.36 14.06134 7.75 15.44 174 66.36 46.78 214 -15.35 10.79135 5.95 14.39 175 70.53 49.42 215 -15.63 7.86136 4.34 13.27 176 74.05 52.16 216 -16.21 5.18137 3.29 12.16 177 78.92 55.13 217 -16.06 2.82138 3.28 11.17 178 79.93 57.89 218 -15.78 0.75

61

139 3.86 10.36 179 77.07 60.02 219 -16.02 -1.11140 4.48 9.71 180 77.23 61.71 220 -16.87 -2.86141 5.48 9.24 181 75.62 63.25 221 -18.10 -4.55142 6.42 8.92 182 74.13 64.46 222 -20.20 -6.29143 7.68 8.79 183 74.71 65.60 223 -21.07 -7.93144 9.36 8.85 184 74.51 66.59 224 -21.17 -9.40145 11.48 9.14 185 74.11 67.43 225 -18.84 -10.45146 13.53 9.63 186 76.04 68.38 226 -15.82 -11.05147 15.56 10.29 187 78.31 69.49 227 -12.23 -11.18148 17.84 11.13 188 78.88 70.53 228 -9.09 -10.95149 19.05 12.01 189 76.62 71.21 229 -6.36 -10.24150 20.65 12.97 190 76.70 71.82 230 -5.16 -9.85151 21.45 13.91 191 76.07 72.29 231 -3.86 -9.19152 22.65 14.88 192 73.26 72.40 232 -1.95 3.38153 23.52 15.84 193 71.44 72.29 233 1.01 -7.34154 24.87 16.85 194 69.02 71.93 234 3.16 -6.17155 26.23 17.89 195 65.26 71.19 235 6.86 -4.72156 27.06 18.91 196 62.63 70.24 236 9.69 -3.12157 27.90 19.91 197 60.22 69.12 237 11.42 -1.51158 28.89 10.90 198 56.41 67.71 238 12.39 0.04159 29.72 21.88 199 54.01 66.19 239 14.54 1.65160 30.04 22.79 200 50.65 64.46 240 16.04 3.25

DAYS MACD SIGNAL LINE241 17.34 4.81242 17.64 6.24243 15.98 7.32244 14.56 8.12245 11.17 8.46246 9.16 8.54247 7.02 8.37248 5.32 8.03249 3.20 7.50

62

250 2.61 6.95251 2.24 6.43252 3.28 6.08253 4.12 5.86254 4.90 5.75255 4.53 5.62256 4.44 5.49257 4.96 5.43258 3.89 5.26259 3.05 5.01260 0.31 4.49261 -3.67 3.58262 -9.76 2.10263 -15.25 0.17264 -18,83 -1.94265 -22.07 -4.17

DAYS MACD SIGNAL LINE266 -23.88 -6.36267 -25.43 -8.48268 -27.13 -10.55269 -28.46 -12.54270 -29.56 -14.43271 -31.08 -16.28272 -33.95 -18.25273 -36.86 -20.32274 -38.53 -22.34275 -39.22 -28.66

63

GRAPH:-02

64

INTERPRETATION

When the lines are below the zero line, if the MACD line crosses the average line from below to above, it indicates a buying opportunity. At this point prices were low and the investor can make buying decision.

When the lines are above the zero line, crossing of MACD line from above to below the average line, signals a selling opportunity. After that point prices were declining and the investor can make selling decision.

Hence now the MACD is below the zero line and the MACD line is crossing the average line from below to above, it is indicating the buying opportunity,

Table 1.3:- ANALYSIS USING STOCHATICS

DAYS

%K %D DAYS

%K %D DAYS

%K %D

1 42 9.159159

11.18077

83 25.844 19.68198

2 43 14.50151

18.40909

84 15.77869

14.27574

3 44 9.726962

17.96778

85 18.19095

12.71528

4 45 33.39844

26.18421

86 8.277405

20.19465

5 46 12.0155 20.18421

8 10.95238

30.42226

6 47 33.53659

23.23303

88 36.30796

37.94109

7 48 15.04065

18.57883

89 38.84514

44.44444

8 49 20.89888

37.62765

90 38.67017

52.69758

9 50 20.28986

62.83368

91 55.81802

68.64975

65

10 87.1831 65.39989

51 72.94686

70.35714

92 63.60455

73.95742

11 43.05556

49.4513 52 84.04423

71.9326 93 86.52668

80.49242

12 62.96296

53.89908

53 54.9763 70.66877

94 71.74103

74.19583

13 46.17284

56.8291 54 76.77725

80.69117

95 84.01361

59.77606

14 52.81124

68.09409

55 80.25276

84.95982

96 66.91542

44.07631

15 68.23105

81.40407

56 85.63734

75.14654

97 17.13836

43.36028

16 80.52805

81.76412

57 89.67391

64.75455

98 41.84783

65.85366

17 92.49292

79.81913

58 51.9263 59.8961 99 75.55147

69.54657

18 72.09632

73.944 59 55.57229

49.49799

100 80.51471

65.24657

19 74.74601

78.08803

60 71.38554

38.71967

101 52.57353

50.05875

20 75 82.02247

61 21.53614

24.07014

102 62.7027 42.47587

21 84.41011

77.7129 62 21.83908

29.16916

103 36.15257

29.374

22 86.6573 73.53103

63 29.06404

36.32568

104 30.18242

25.12507

23 60.06339

60.76733

64 39.12088

44.96253

105 22.4736 21.39535

24 71.75732

56.63569

65 44.77212

52.7572 106 22.70169

30.24421

25 51.28205

54.39356

66 52.27882

50.14706

107 18.70169

29.59318

26 47.73176

39.50906

67 59.48827

43.72154

108 48.88889

33.35616

27 62.62458

39.75637

68 40.15444

28.92128

109 19.34783

27.42813

28 9.468439

26.29674

69 33.63636

19.69716

110 29.13043

31.89143

29 47.1760 36.2600 70 15.9196 15.3254 111 35.4223 25.4972

66

8 5 3 7 4 930 20.9251

125.4804

371 11.7199

420.1646

1112 31.8181

830.1470

631 37.1559

636.4891

572 18.3925

824.7016

1113 10.3359

235.7209

332 19.6116

529.7405

273 30.625 22.4641

5114 50.4298 52.0934

833 51.2280

728.6684

874 25.1562

525.5463

1115 49.5575

250.9341

234 12.9186

618.8164

975 10.9452

726.1295

6116 56.3421

855.3589

35 15.70248

20.984 76 38.88071

30.12959

117 46.90265

54.18182

36 25.41528

21.77419

77 27.02703

32.65642

118 62.83186

62.4683

37 20.79867

14.35331

78 23.30097

31.78874

119 53.08057

66.19273

38 19.32029

11.56812

79 46.37904

27.66557

120 71.56398

74.40758

39 3.26087 12.13097

80 26.08108

15.52028

121 73.93365

78.91322

40 11.95652

14.11141

81 12.83784

15.96146

122 77.72512

75.60771

41 14.97635

14.97635

82 8.121827

16.77469

123 85.60411

78.49089

67

DAYS

%K %D DAYS

%K %D DAYS

%K %D

124 63.08901

68.27344

165 13.56147

11.95327

206 94.7708 91.18928

125 86.64921

60.92985

166 12.73504

11.03463

207 83.42954

88.64401

126 54.90716

35.31655

167 10.68525

8.877193

208 95.52502

88.01899

127 44.75375

33.26785

168 10.30494

12.69708

209 87.17407

74.94077

128 10.06424

37.26558

169 6.069364

13.26671

210 80.5676 67.00948

129 42.49578

51.18662

170 21.9254 13.28582

211 52.90148

60.10764

130 53.457 61.06791

171 11.98394

9.430707

212 64.93506

54.58248

131 56.88623

66.86627

172 4.759174

5.54902 213 69.44734

40.6658

132 72.00599

74.6008 173 11.56739

10.33183

214 25.61576

27.76149

133 71.70659

80.61943

174 0 12.26179

215 29.3578 41.21935

134 80.08982

85.56244

175 17.86448

25.32808

216 28.21577

41.94329

135 88.55346

79.93894

176 17.83951

27.01934

217 67.63485

47.72571

136 87.16981

69.45713

177 40.43035

24.48575

218 29.97925

37.14286

137 62.01991

52.77778

178 22.35169

21.58568

219 45.58522

34.02896

138 50.73996

41.70347

179 11.70551

27.62941

220 35.22562

46.89142

139 42.75362

36.83324

180 29.82288

36.79592

221 16.44833

56.6414

140 33.03571

39.56797

181 39.82767

46.17839

222 78.68132

73.99267

141 35.12706

37.27615

182 40.73719

56.5821 223 64.94505

67.27083

142 49.4768 26.7693 183 57.9703 66.9219 224 78.3516 65.9654

68

3 6 2 7 5 6143 49.4768

311.70483

184 71.03877

78.66603

225 59.67588

58.17938

144 9.167545

6.356488

185 71.75682

75.28323

226 62.15334

52.99616

145 0.982318

10.79692

186 93.20249

58.40415

227 53.75712

44.20126

146 8.940092

16.94417

187 60.89038

38.2394 228 44.68371

35.12786

147 22.69574

18.16906

188 22.61029

30.92852

229 34.32032

23.64289

148 19.91744

17.30412

189 32.12316

28.1642 230 26.37954

18.80849

149 10.99656

12.82051

190 40.40342

29.19283

231 10.2288 14.37041

150 20.79906

15.7213 191 8.413793

23.48356

232 19.87225

26.92017

151 5.331412

21.46974

192 37.77293

29.59858

233 13.16188

32.9314

152 19.88473

30.00504

193 25.21468

42.94539

234 49.59677

46.66115

153 39.19308

32.35127

194 25.21468

64.0625 235 37.60684

47.19288

154 31.09244

29.59248

195 73.53535

76.74469

236 52.3888 51.20813

155 23.94958

35.98099

196 86.56999

68.79964

237 51.23558

42.91598

156 33.01527

32.69358

197 69.92434

67.23373

238 50 36.38111

157 51.37421

35.37642

198 44.53441

69.68961

239 27.51236

28.44646

158 15.1751 23.219 199 86.47773

76.37816

240 31.63097

35.48054

159 40.85603

26.06982

200 78.05668

82.21344

241 25.3664 41.75277

160 13.11475

12.88867

201 66.07649

87.72612

242 52.49377

64.60377

161 34.4186 13.33333

202 95.13889

91.24301

243 48.16017

77.42839

69

162 0.546448

12.38095

203 92.39654

91.18463

244 91.55844

84.92129

163 14.32193

16.43431

204 87.16469

91.95246

245 87.68328

78.77347

164 21.41952

15.46579

205 93.9219 90.70741

246 77.49437

80.55485

70

DAYS %K %D247 70.7241

984.00103

248 93.52851

92.16772

249 87.75039

88.70087

250 95.48495

78.94425

251 82.82051

68.50033

252 54.77137

43.15789

253 65.14806

35.19452

254 11.0766 21.66489255 31.9742

527.22988

256 22.34392

20.7375

257 27.27273

24.81891

258 12.59584

35.53868

259 36.01004

64.59037

260 55.01894

81.44075

261 87.98009

90.32615

262 90.82247

88.48921

263 91.46522

86.81596

264 83.02658

87.20177

265 85.78732

84.73074

266 92.79141

86.49964

267 75.6135 78.72299268 91.9926

775.18935

269 68.60841

53.94625

270 60.45918

36.25129

271 16.70762

37.28235

GRAPH:-03

INTERPRETATION

Buy when the oscillator (either %K or %D) falls below a specific level (e.g.…20) And then rises above that level. Sell when the oscillator rises above a specific level (e.g.…80) and then falls below that level.

Buy when the %K lines rises above the %D line and sell when the %K line falls below the %D line.

Since the %K line is rising above the %D line and the oscillator falls below the level 20, the trend line showing buying condition for the investors.

71

4. FINDINGS AND SUGGESTIONS

FINDINGS:

The study was conducted using the price of commodity i.e. GOLD on Global Market for one year (03.01.2011 to 20.12.2011 and it has been analyzed using 3 technical analysis indicators and the following findings have been made.

RSI- This indicator gives hold signal for gold at the end of 2011.

MACD- This indicator gives buying signal for gold at the end of 2011.

STOCHASTICS- This indicator gives buying signal for gold at the end of 2011.

From this study it was found that technical analysis indicators can be used for making buying and selling decisions in the commodity market.

The study gives a clear picture of the trend in future gold prices. It was also found that a combination of technical analysis indicators

will give the accurate indicator about the trend in future gold prices rather than a single indicator.

SUGGESTIONS:

Technical analysis will improve the investment decisions. It is simply and more reliable than fundamental analysis because the information required for Technical analysis is freely available as compared to fundamental analysis.

One should keep out of slow trading markets or watch until you get a definite indication of change in trend.

Fundamental rule to market – For gold to show up trend and continue to advance they must make higher bottoms and higher tops. When the trend is down they must make lower tops and lower bottoms and continue on down to lower levels. But the price can move in a narrow

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trading for weeks or months or even years and not make a new high or a new low. But after a long period of time when the gold break into new lows they indicate lower prices and after a long period of time when they advance above old high or old tops they are in a stronger position and indicate higher price. Maintaining charts will help in seeing what positions the gold is in and what stage it is between the extreme high and extreme low.

A single indicator is not enough for arriving at selling or buying decisions. A combination of Technical Analysis indicators is required for more accurate decisions.

Even though Technical Analysis itself is enough for making decisions in commodity market, simultaneous usage of both Fundamental and Technical Analysis will reduce errors in forecasting future Prices.

In order to make a perfect trend prediction, analysis of minimum past five years data is required.

For predicting accurate trend of future prices more sophisticated software are required.

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5. CONCLUSION

The study shows that Technical Analysis indicators can give a fair idea about future price movements in commodity market. It is easy for anybody to do Technical Analysis because of the easy availability of information. But it is necessary to use more that 10-15 indicators for reaching a conclusion regarding the gold price movement.

The study shows that all the technical analysis indicators cannot give an accurate decision. Only few indicators like MACD and STOCHASTIC indicators can give accurate decisions.

The study shows that historical prices have an impact on future gold prices. So past trend can be used for predicting the trend of the future prices.

In reality only minorities of technicians can consistently and accurately determine future prices. However, even if you are unable to accurately forecast prices, technical analysis can be used to consistently reduce your risks and improve your equities in the market.

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6. BIBLIOGRAPHY

For the purpose of this study following books were referred:

“International Financial Management” – MADHU VIJ – Second Edition. “Investment Analysis and Portfolio Management” – Prasanna Chandra –

TMH – 2nd Edition, 2005. “Introduction to technical analysis” – Martin Pring’s – TMH edition.

Website link

www.hif.co.id www.hif-india.com www.forexfactory.com www.babypips.com www.forexpros.com www.google.co.in

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