RE:RE:RE:RE:Price of gold2ND PART OF MY POST
India introduced tough duties and quantitative restrictions on gold imports last year as part of a plan to reduce the country’s current account deficit following a currency crisis that saw a sharp drop in the value of the rupee.
Many analysts expected these restrictions to be gradually removed as India’s current account deficit fell sharply over the course of this year.
The government of recently elected prime minister Narendra Modi surprised the industry, however, by keeping policies unchanged in its maiden budget in July.
India’s gold and jewellery industry has long petitioned New Delhi to remove the curbs, but analysts say big changes are not likely in the near future...
...Demand is also set to rise in the coming months during the wedding season and a string of religious festivals, when it is considered auspicious to buy the precious metal.
“I think we should have a very good season of buying,” says Ashok Minawala, former chairman of the All India Gems and Jewellery Trade Federation, who estimates that India’s monthly demand for gold rises from between 40 to 50 tonnes, to 60 tonnes during peak season. “This is a booming economy at the end of the day.”
India remains an important part of the global market, overtaking China to become the world’s largest buyer of gold once again in the second quarter.
Domestic supply pressures on the metal have eased slightly since May, when the Reserve Bank of India announced that certain trading houses would be allowed to import gold...
The paragraph I have emboldened may explain the current weakness in the gold price. Gold traders were expecting an easing of the import curbs to lift Indian demand, and that easing isn't happening. However, IMO those traders may find themselevs caught short because, as the article points out, though official demand may be constrained, there is plenty of physical demand from smuggled gold.
Cheers,
Mark