Tuesday’s Commentary On Gold (GLD)
Gold fell to 4 week lows Monday, as participants continued to pare holdings of the precious metals on expectations of tighter US monetary policy in the coming months.
The timing of a US Fed rate hike has been a constant source of debate in the markets in recent months.
The US central bank has one more scheduled policy meeting before the end of the year in mid-December.
Gold rallied in October as concerns over a global economic slowdown led by China and its impact on US growth prospects had prompted market participants to push back expectations for a rate increase to March 2016. We wait to see.
Meanwhile, Neutral to Bearish
India, the world’s 2nd-biggest Gold buyer after China, imposed the import restrictions last year to avert a trade deficit crisis that pushed the Rupee to record lows.
“Restrictions placed on import of Gold… stand withdrawn with immediate effect,” India’s central bank said in a statement on Saturday, 29 November.
Support for Spot Gold comes from jewelry demand from India in the lead up to and during the wedding season, which starts again in late September. India did record a 176% increase in Gold imports in August to US$2-B from about US$756-M.
Overall, the impact of wedding season Spot Gold buying has faded in recent times as India is no longer the world’s largest Gold consumer, partly because of the on-going government import restrictions on precious metals. If they are further relaxed, perhaps India will regain its Top spot.
India’s Akshaya Tritiya festival considered by India’s more than 900-M Hindus as an auspicious day to buy Gold and Silver, fell on 21 April this year. Bullion is bought in India during festivals and marriages as part of the bridal trousseau or gifted in the form of jewelry by relatives.