Gold modestly higher after India raises import duties again
LONDON (Aug 13) Gold was fractionally higher in European trading on Tuesday morning, extending its rally into a fifth day even after the Indian government raised import duties on gold to 10 percent.
Spot gold was last at $1,336.40/1,337.20 per ounce, up 20 cents on Monday’s close, having climbed from a low of $1,282.15 on Wednesday.
The last time the metal managed to close higher for five consecutive days was in mid-April, immediately after the spectacular price collapse which saw it go to $1,325.80 from $1,564.95 in less than three days.
Earlier today, the Indian government announced further increases on precious metals import duties to curb its current account deficit.
Following widespread speculation on Monday, it announced on Tuesday that it will raise the import duty on gold to 10 percent from eight percent and on silver to 10 percent from six percent.
In recent days, the yellow metal has bucked its negative correlation with the US dollar, trending higher even as the currency has found a foothold against the euro after recent slippages.
The dollar was last at 1.3285 against the US currency, up fractionally on the day, having been to a near two-month low of 1.34 on Thursday.
In equities Asian indices closed higher, the Nikkei adding 2.5 percent and the Hang Seng climbing 1.2 percent. In Europe, the FTSE 100 and the Dax are both smartly higher.
The data calendar is relatively busy today. Numbers from the eurozone this morning were mixed but with a positive bias - German final CPI for July at 0.5 percent was as expected, although the WPI at -0.3 percent missed the forecast 0.2 percent, and ZEW economic sentiment for August surprised to the upside at 42.0
For the EU as a whole, ZEW economic sentiment for August was positive at 44.0, beating the forecast 37.4, while industrial production for June at 0.7 percent was below the predicted 1.1 percent but up from the previous month’s -0.3 percent.
July US retail sales figures are due later - these are expected to have risen, which may provide some clarity on whether the US Federal Reserve might start to taper its programme of stimulus measures. The recent run of largely positive data out of the country suggests the central bank may begin to unwind quantitative easing as soon as next month.
In other precious metals news, fresh violence has erupted at Lonmin's South African operations - a union representative was shot dead shortly ahead of the anniversary of last year’s massacre at Marikana. Production has so far been unaffected.
The platinum group metals are firmer. Platinum gained $12 to $1,506/1,516 per ounce, while palladium added $6 to $740/745. Silver outperformed - it was last up 28 cents at $21.63/21.68.
