Some good news for gold investors, India is back on the map, they sure had a list of issues to deal with over the past year.
India Sees Gold Imports Surge 65% In June
July 16th, 2014
Gold’s sell off yesterday was again due to concentrated selling on the COMEX. The sale of over 17,000 contracts or over $2.3 billion worth of gold futures contracts in minutes led to gold falling again. Support is likely to be found at previous resistance at $1,280/oz.
Gold In U.S. Dollars and Global ETF Holdings – 6 Months (Thomson Reuters)
The sell off has led to increased demand for physical gold by buyers globally. In China, the world’s largest importer of gold, the sell off was greeted by Chinese buyers as local premiums edged up to just over $1 an ounce on the Shanghai Gold Exchange (SGE) from a small discount in the previous session.
Gold imports into India surged in June where there was a 65% annual rise in gold bullion imports.
Bullion is India’s second-biggest import item after oil and was one of the principal factors in putting it on the brink of a full-scale balance of payments crisis last year.
In a desperate bid to trim a gaping current account deficit, India last year increased import duties on gold and imposed a rule that required a fifth of all bullion imports be re-exported.
Those measures had crimped official supply and pushed up premiums in the domestic market, sparking a huge rise in smuggling. However, a strong rebound in gold imports will likely mean the curbs stay in place for some time.
Finance Minister Arun Jaitley surprised bullion markets by keeping the import duty on gold and silver unchanged at 10% in his maiden budget last week.
India’s huge appetite for gold is due to still very high levels of inflation which are still over 7% – retail inflation in June hit 7.31%, and the continuing depreciation of the rupee.
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