India’s gold imports are likely to exceed last year’s level to around 900 tonnes in the current calendar year on higher demand despite government curbs on its shipments to rein in current account deficit, a top official of World Gold Council said on Monday.
Posts Tagged: precious metal
Curious who the biggest casualty of last month’s forced precious metal take down is? It may very well be John Paulson, who has systematically been blown out of all his concentrated positions in the past few years, and who, according to Bloomberg, just lost a record 27% in one month in his gold fund, and down 47% so far in 2013. If anything, it may explain the ongoing collapse in GLD holdings as he (among others) is forced to continue liquidating. The good news is that one levered players such as Paulson are finally blown out, there is hope that only far more rational, “non-weak handed” players remain at the table.
And some more news on the ongoing physical stampede out of Reuters:
- India, the world’s biggest buyer of the metal, will celebrate Akshaya Tritiya next week, the second-biggest gold buying festival after Dhanteras. Weddings have also started and will continue until July.
- At 0934 GMT, the actively traded gold for June delivery on the Multi Commodity Exchange (MCX) was 0.54 percent lower at 26,950 Indian rupees per 10 grams, after gaining more than a percent in the previous two sessions.
- A stronger rupee kept the upside in prices limited. The rupee plays an important role in determining the landed cost of the dollar-quoted yellow metal.
- Premiums charged on London prices were at $7-8 an ounce on Tuesday.
- The RBI could restrict the import of gold on consignment basis by banks only to meet the genuine needs of exporters of gold jewellery in late May, governor D. Subbarao said in the monetary policy statement on May 3.
‘Some of the mugs have taken extreme bets on a falling gold price,” says one precious metal retailer. “Never have the money managers become so convinced that gold is about to fall heavily.”
“It could actually mean that the gold price is about to rise strongly “as they must buy back these positions”, the seller argues. So runs the logic among those with a tendency to dangle every piece of news, good or bad, in front of would-be customers as an incentive to buy the precious metal.
Still, the biggest of gold backers would have to admit that now may not be the best time to be flogging gold, as economic optimism around the US, the world’s biggest economy, rises, and worries around the eurozone recede.
Speculation that the US Federal Reserve might scale back its massive monetary easing efforts earlier than expected have further weakened demand for the “safe haven” metal.
The price is now down 5pc this year to $1,582 (£1,059) an ounce. Loud talk among investors is that 2013 may mark the end of its spectacular 12-year bull run. >> Read More
As gold breaks through death crosses and so forth, falling below $1600, sentiment against the precious metal is changing rapidly. People are more comfortable getting bearish on it.
Money managers held a record number of bets on lower gold prices on the main U.S. gold exchange, according to data released Friday by the Commodity Futures Trading Commission.
Hedge funds and other investment managers tracked by the commodity regulator boosted their bets on lower Comex-traded gold futures and options by 33%, to 65,617 contracts, during the week ended Tuesday. That is the most in weekly CFTC data going back to June 2006.
For more on the next direction for gold, check out this epic post from All Star Charts, examining the full gold technical analysis.
India’s gold imports in January surged 23 per cent from a year ago to their highest in 18 months as traders snapped up supplies ahead of a hike in duty, undermining the government’s efforts to control a ballooning current account deficit.
The world’s top bullion buyer imported 100 tonnes of gold last month, the head of the Bombay Bullion Association said on Friday. This is about 40 per cent more than the country’s average monthly imports last year.
“The total imports figure for 2012 was around 860 tonnes, so 100 tonnes in a month is too high. Also oil is trading firm above $95 (per barrel), so this will impact the oil import bill and overall deficit targets,” said Navneet Damani, associate vice president with Motilal Oswal Commodities.
Alarmed by the mounting current account deficit that hit a record 5.4 per cent of gross domestic product in July-September the government moved to rein in its gold imports – second only to oil in value – by raising the import duty on the precious metal to 6 per cent from 4 per cent on Jan.21. >> Read More
Concerned over gold’s impact on India’s current account deficit (CAD) which has soared to all-time high, RBI today suggested higher customs duties on import of the precious metal and tax sops for pledging gold with banks.
The Reserve Bank’s suggestions came on the day when Finance Minister P Chidambaram said the government is considering steps to make gold imports more expensive.
Pointing out that large gold imports are adversely impacting the CAD, a draft RBI report said there is a need to moderate the demand for gold imports, as ensuring external sector’s stability is critical.
“There is a need to moderate the impact on the current account deficit. Fiscal measures to reduce the gold imports may be revisited,” said a report of the Working Group on Gold. >> Read More
Famous market whistle blower Andrew Magurie discusses manipulation in the gold and silver markets and the price divergence between Eastern and Western markets. Listen to the KWN interview here: Part I / Part II
Ships entering one of India’s finest deepwater ports at Andhra Pradesh in the south of the country are filled with everything from bauxite and aluminium to coal and capital equipment. Yet they depart almost empty, says D.V.S. Raju, founder of the company running the port.
Meanwhile, sales of gold jewellery have been falling in India, depressed by the high price of the precious metal, especially in local currency terms, by gloomy consumer sentiment and even by the pronouncements of the country’s numerous astrologers.
Nowhere else does gold play as important a role in the macroeconomy as in India, where it also provides valuable insights into consumer sentiment. Last year, India spent $56bn on gold imports, worsening its current account deficit and putting downward pressure on the rupee, which in turn fed further demand for gold. Now that demand has become weaker. That is not because consumers have regained their faith in their currency, but rather because gold has become too expensive in rupee terms, jewellers say. >> Read More
India’s net gold imports for domestic consumption are likely to be about 800 tonne this year following a pick-up in momentum during the festival season, according to the World Gold Council (WGC).
In 2011, the net imports for domestic consumption stood at 969 tonne.
“The first two quarters the demand was not that great following economic downturn, monsoon deficit, duty issues and jewellers strike, high prices. However, it picked up last month in the festival season and this year we expect the gold demand to be around 800 tonne,” WGC Director, Investment, Amresh Achrya said.
2011, he said, was an extraordinary year and the demand was very high and so were the imports. In the long run, he said, the demand for the precious metal remains strong.
Talking about China, he said, even as the demand during quarter three was weak, it is picking up. Quarter four in China is usually strong due to festival season. >> Read More
Gold could hit an all-time high of $2,400 by next summer, driven up by a third round of quantitative easing in the US. The first round of QE in February 2009 caused the gold price to increase rapidly from a base of $900/oz – from which it has never looked back.
BlackRock fund manager Evy Hambro who invests in the precious metal and gold equities, predicted that QE3 could result in the gold price hitting US$2,400/oz by the middle of next summer.
In his gold report this week he said: “The gold chart has turned decidedly bullish with the 50-day moving average rising above the 200-day moving average. The last time this happened was in February 2009, which interestingly was shortly after the implementation of QE1. Then, gold was $900/oz and never looked back. Should we witness a similar rally, prices would be taken to $2,400/oz by midsummer next year – and $1,760/oz would be the new floor.”
The International Monetary Fund released data this week which revealed central banks continue to buy gold with both South Korea and Paraguay recently adding to their reserves.
South Korea has doubled its bullion assets over the past year, purchasing 16 tonnes in July alone.
Mr Hambro said: “If the third round of quantitative easing leads to further weakness of the US dollar, central banks may be prompted to switch more cash reserves into gold.”
Spot gold was up 0.6pc to $1,788.54/oz on Thursday morning, just shy of an 11-month high above $1,791 hit earlier in the week. U.S. gold futures gained 0.5pc to $1,790.20.