Bullion market equations unleash the stimulus for US$

We often kept reiterating the fundamental concept factors in the performance of any markets, be it any commodities or equities or even currency market. The demand and supply equation of the gold market is relentlessly distorted and our stance is bullish in the long term.

Demand for yellow metal is firm:

China, India and their central banks have been the major consumers of this commodity. From these two regions it is claimed that the main sources of gold demand.

Their central banks generously buy this precious metal. In 2014, they purchased for a fifth consecutive year and bought almost 17% more than they did last year. You have to keep one thing in mind when looking at the central banks: they were against the precious metal, and all of a sudden their rationale changed. This is a noteworthy consideration.

Also, our predictions are that imperial banks like RBI and PBoC are keen on acquiring gold. We think the smaller ones changing the fundamentals of the market. They don't have gold, and they will want the metal for their reserves as demand remains robust in India and China.

Indian gold imports are of 900 tons with demand increasing 36% from a year ago for the fiscal year 2014-2015 ended March 31. On the other hand, in China the gold is still trendy. For the entire year of 2014, the country consumed its second-highest amount of gold ever recorded.

Gold Supply Is in Trouble:

There exist major problems in mines. Gold production levels at the U.S. mines deteriorating YoY basis.

Precious metal production in the U.S For the last two years has been slumped and moving in the adverse direction very quickly. Other gold-producing regions are showing horrible production figures as well. We are currently sensing demand supply equation creates good shape for dollar trading as this currency is the universal mode of exchange while trading this precious metal which in turn generates higher demands in the days to come.

We are bullish on US$ against major Asian currency cross, hence we recommend to buy more US$ futures versus major Asian currencies such as CNY, JPY & INT etc.

Currently, US$ trading at