Best of the Week
Most Popular
1. Market Decline Will Lead To Pension Collapse, USD Devaluation, And NWO - Raymond_Matison
2.Uber’s Nightmare Has Just Started - Stephen_McBride
3.Stock Market Crash Black Swan Event Set Up Sept 12th? - Brad_Gudgeon
4.GDow Stock Market Trend Forecast Update - Nadeem_Walayat
5.Gold Significant Correction Has Started - Clive_Maund
6.British Pound GBP vs Brexit Chaos Timeline - Nadeem_Walayat
7.Cameco Crash, Uranium Sector Won’t Catch a break - Richard_Mills
8.Recession 2020 Forecast : The New Risks & New Profits Of A Grand Experiment - Dan_Amerman
9.Gold When Global Insanity Prevails - Michael Ballanger
10.UK General Election Forecast 2019 - Betting Market Odds - Nadeem_Walayat
Last 7 days
Gold Stocks Vs Gold – Not A Good Bet - 15th Dec 19
Silver Price Remains in 'Corrective Downtrend' - 15th Dec 19
Amazon - Snow Falling Effect Christmas Lights Outdoor Projector Review - 15th Dec 19
How to FIX Dirty Disk Windows Hard Drive Volume Error 0X80071AC3 - 15th Dec 19
Raffaele Riva and AUREA Are Breaking New Ground in Financial Services Across Europe  - 15th Dec 19
Canadian Cannabis Stocks CRASH as Canopy Growth Hits a Dead End - 14th Dec 19
Retail Sector Isn’t Dead, and These 6% Dividend Paying Stocks Prove It - 14th Dec 19
Top 5 Ways to Add Value to Your Home - 14th Dec 19
Beware Gold Stocks Downside - 13th Dec 19
Fed Says No Interest Rate Hikes In 2020. What About Gold? - 13th Dec 19
The ABC’s of Fiat Money - 13th Dec 19
Why Jo Swinson and the Lib Dems LOST Seats General Election 2019 - Sheffiled Hallam Result - 13th Dec 19
UK General Election 2019 BBC Exit Poll Forecast Accuracy Analysis - 12th Dec 19
Technical Analysis Update: Tadawul All Share Index (TASI) - Saudi Arabia ETF (KSA) - 12th Dec 19
Silver Miners Pinpoint the Precious Metals’ Outlook - 12th Dec 19
How Google Has Become the Worlds Biggest Travel Company - 12th Dec 19
UK Election Seats Forecasts - Tories 326, Labour 241, SNP 40, Lib Dems 17 - 12th Dec 19
UK General Election 2019 Final Seats Per Party Forecast - 12th Dec 19
What UK CPI, RPI INFLATION Forecasts for General Election Result 2019 - 11th Dec 19
Gold ETF Holdings Surge… But Do They Actually Hold Gold? - 11th Dec 19
Gold, Silver Reversals, Lower Prices and Our Precious Profits - 11th Dec 19
Opinion Pollsters, YouGov MRP General Election 2019 Result Seats Forecast - 11th Dec 19
UK General Election Tory and Labour Marginal Seats Analysis, Implied Forecast 2019 - 11th Dec 19
UK General Election 2019 - Tory Seats Forecast Based on GDP Growth - 11th Dec 19
YouGov's MRP Poll Final Tory Seats Forecast Revised Down From 359 to 338, Possibly Lower? - 10th Dec 19
What UK Economy (Average Earnings) Predicts for General Election Results 2019 - 10th Dec 19
Labour vs Tory Manifesto's UK General Election Parliamentary Seats Forecast 2019 - 10th Dec 19
Lumber is about to rally and how to play it with this ETF - 10th Dec 19
Social Mood and Leaders Impact on General Election Forecast 2019 - 9th Dec 19
Long-term Potential for Gold Remains Strong! - 9th Dec 19
Stock and Financial Markets Review - 9th Dec 19
Labour / Tory Manifesto's Impact on UK General Election Seats Forecast 2019 - 9th Dec 19
Tory Seats Forecast 2019 General Election Based on UK House Prices Momentum Analysis - 9th Dec 19
Top Tory Marginal Seats at Risk of Loss to Labour and Lib Dems - Election 2019 - 9th Dec 19
UK House Prices Momentum Tory Seats Forecast General Election 2019 - 8th Dec 19
Why Labour is Set to Lose Sheffield Seats at General Election 2019 - 8th Dec 19
Gold and Silver Opportunity Here Is As Good As It Gets - 8th Dec 19
High Yield Bond and Transports Signal Gold Buy Signal - 8th Dec 19
Gold & Silver Stocks Belie CoT Caution - 8th Dec 19
Will Labour Government Spending Bankrupt Britain? UK Debt and Deficits - 7th Dec 19
Lib Dem Fake Tory Election Leaflets - Sheffield Hallam General Election 2019 - 7th Dec 19
You Should Be Buying Gold Stocks Now - 6th Dec 19
The End of Apple Has Begun - 6th Dec 19
How Much Crude Oil Do You Unknowingly Eat? - 6th Dec 19
Labour vs Tory Manifesto Voter Bribes Impact on UK General Election Forecast - 6th Dec 19
Gold Price Forecast – Has the Recovery Finished? - 6th Dec 19
Precious Metals Ratio Charts - 6th Dec 19
Climate Emergency vs Labour Tree Felling Councils Reality - Sheffield General Election 2019 - 6th Dec 19
What Fake UK Unemployment Statistics Predict for General Election Result 2019 - 6th Dec 19

Market Oracle FREE Newsletter

UK General Election Forecast 2019

Gold Prices Bargain for India's Consumers, But Problem for Government

Commodities / Gold and Silver 2013 Jun 11, 2013 - 12:30 PM GMT

By: Money_Morning

Commodities

Diane Alter writes: The last several months have been tough on gold prices, but gold bugs haven't lost their insatiable appetite for the yellow metal. With gold officially in a bear market, demand is surging at today's bargain prices.

Gold demand is especially strong in India, where gold is the investment of choice among consumers. India's gold imports reached 162 tons in May, almost twice the average level.


That's why last week the country - the world's biggest consumer of gold - increased the duty of gold imports for the second time in six months.

The duty was boosted from 6% to 8% on gold ore, and from 5% to 7% on intermediate products in attempts to decelerate the accelerating gold demand. Bullion prices fell 0.25% to $1,399.36 an ounce following the move.

Gold imports are one of the biggest contributors to India's mushrooming account deficit (which occurs when imports exceed exports). An increasing deficit affects the country's foreign exchange reserves and the value of its currency.

Friday, the rupee closed below the key 57 mark against the U.S. dollar for the first time in a year. The slide further casts a shadow on India's economy amid pricier imports and heightened inflationary risks.

Policy makers in India have been attempting to reduce its deficit and improve finances as it faces possible rating downgrades. They hope the duty increase will help.

What they expect is a steep decline in gold shipments over the next few months.

"In April and May we imported around 300 tons. In June and July imports would be around 90 tons," Prithviraj Kothari, director with RiddiSiddhi Bullions Ltd, a Mumbai gold-based wholesaler told BBC News.

Analysts said the increased import tax will fail to cool consumer demand, which means gold buyers will look elsewhere to get their hands on the yellow metal.

"From the last few months all the wrong decisions are being taken by the government to tackle gold imports," Mogit Kamboi, president of the Bombay Bullion Association told BBC. "This is not going to help reduce imports but smuggling will increase."

The country's jewelry industry has asked for an immediate rollback of the duty increase and meets with Finance Minister P. Chidambaram next week.

"We are with the government on the need to reduce the current account deficit, but not at the cost of damaging the industry," Haresh Soni, chairman of the All India Gems & Jewellery Trade Federation told The Wall Street Journal. "There are better ways to curb gold demand than kill an entire industry."

Cheap Gold Prices Drive China Demand

Also weighing on gold prices last week was a report from China revealing gold imports from Hong Kong slumped in April from a record. The drop-off came as banks failed to get quotas fast enough to meet ballooning demand from mainland buyers eager to bulk up bullion purchases amid depressed prices.

After imports reached a record in March, quotas have been in short supply. Only qualified banks that secure quotas from China's central back are permitted to import gold to the mainland.

"Some qualified banks used up their gold import quotas in the first three months and weren't able to get the paperwork done fast enough to bring in bullion in April," Tian Rui, vice president of the precious metals division at INTL FCStone Trading Co. told Bloomberg. "We might see higher imports in May because demand surged after the rout."

In April, gold buyers in China paid four times the premium they paid a month earlier to take immediate delivery of gold. They paid up to appease consumers who swamped jewelry shops after gold prices slipped by the most in some 30 years.

China is the world's largest consumer behind India.

Back in the United States, Friday's mixed jobs report provided little guidance for the gold market. But, it bolstered equities, boosted the dollar and drew attention from gold.

The price of gold fell $32.80, or 2.3%, Friday to log a loss of 0.7% for the week. It was gold's first weekly loss in three. The yellow metal settled at $1,383 an ounce.

"I think for the short term the bottom in metals is in. We keep going back to that $1,400 area. To really flip this thing around in the short term we need a close over $1,423, but for the next week I think we'll at least go back to $1,400," Bob Haberkorn, senior commodities broker at RJO Futures told Kitco.

For more on the gold price in 2013, check out this exclusive Money Morning interview: Rick Rule Explains Falling Gold Prices

Source :http://moneymorning.com/2013/06/10/gold-prices-are-bargain-for-indias-consumers-but-problem-for-government/

Money Morning/The Money Map Report

©2013 Monument Street Publishing. All Rights Reserved. Protected by copyright laws of the United States and international treaties. Any reproduction, copying, or redistribution (electronic or otherwise, including on the world wide web), of content from this website, in whole or in part, is strictly prohibited without the express written permission of Monument Street Publishing. 105 West Monument Street, Baltimore MD 21201, Email: customerservice@moneymorning.com

Disclaimer: Nothing published by Money Morning should be considered personalized investment advice. Although our employees may answer your general customer service questions, they are not licensed under securities laws to address your particular investment situation. No communication by our employees to you should be deemed as personalized investent advice. We expressly forbid our writers from having a financial interest in any security recommended to our readers. All of our employees and agents must wait 24 hours after on-line publication, or after the mailing of printed-only publication prior to following an initial recommendation. Any investments recommended by Money Morning should be made only after consulting with your investment advisor and only after reviewing the prospectus or financial statements of the company.

Money Morning Archive

© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules