Worst November In 35 Years For Gold As India's Import Ban Forces Jump In Recycling

November 29, 2013

WHOLESALE London prices for gold pushed higher in quiet trade Friday morning, on course for the largest November drop since 1978 in US Dollar terms.

Down 5.9% from the last London Fix of October, Dollar gold this morning touched $1249 per ounce.

That would be the lowest monthly finish since June's 3-year low.

Global stock markets meantime hit fresh 6-year highs on the MSCI World index, as the Japanese Nikkei closed its strongest November since 2005.

The Japanese Yen today hit its lowest level in a half-decade to the Euro.

Gold for Japanese investors rose to 1-week highs Friday morning, cutting November's drop to 1.9%.

"Trading has been relatively subdued," says a European bank dealing desk, pointing to the US Thanksgiving holidays.

"Some light buying from short-term players," says a Swiss refiner's note, again citing "very thin conditions."

Tracking Friday's rally in gold, silver also rose but held $2 per ounce below the end of October, heading for a 9.1% drop in November at $19.93.

"Physical [gold] demand is solid," says ANZ Bank's commodity team in a special report, "but not bullish enough to spark significant short covering [by bearish traders in gold futures].

"[That's] reflected in subdued Shanghai Gold Exchange premiums."

Trading volumes in Shanghai gold slipped back Friday, pulling the premium above London settlement down to $6 per ounce from the recent peak of $9 hit Thursday.

ANZ now forecasts 2013 gold imports to China of 1,050 tonnes, topping last year's record by some 80%.

"[But] we believe caution is warranted in expecting the growth in Chinese gold demand will be repeated next year," says the banks' analysts, stating a "baseline expectation" of a drop in 2014 imports back to 900 tonnes.

Meantime in former world No.1 gold consumer nation India, where gold prices on the MCX futures market ended the day unchanged near 6-week lows, "People have started coming with recycled gold," Reuters quotes a gold retailer in the famous Zaveri Bazaar.

Thanks to the Indian government's gold import rules effectively shutting legal inflows, "There is no gold available in the market this wedding season," the retailer, Kumar Jain, goes on.

So the parents of brides-to-be "have started exchanging their old gold for new, and paying the labor charges," he adds, forecasting perhaps 400 tonnes of gold recycling this year, compared with more typical levels of 130 tonnes.

Import duties, the lack of supply and other costs have pushed Indian gold dealers' quotes for physical bullion to $130 per ounce above world prices this month.


Adrian Ash

(c) BullionVault 2013

Please Note: This article is to inform your thinking, not lead it. Only you can decide the best place for your money, and any decision you make will put your money at risk. Information or data included here may have already been overtaken by events – and must be verified elsewhere – should you choose to act on it.

Adrian Ash is head of research at BullionVault, the physical gold and silver market for private investors online. City correspondent for Bill Bonner’s Daily Reckoning from 2003 to 2008, and previously head of editorial at London's top publisher of private-investment advice, Adrian is now a regular contributor to many leading analysis sites including Forbes and Gold-Eagle, and a regular guest on the BBC as well as international broadcasters. His views on the gold market are frequently quoted by the Financial Times, Daily Telegraph, MarketWatch and many other leading new outlets.


China is poised to become world's biggest gold consumer.

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