Gold Rises for Fourth Day – IMF $500 Billion Hopes Create Concerns
Gold’s London AM fix this morning was USD 1,664.00, GBP 1,076.53, and EUR 1,289.62 per ounce.
Yesterday’s AM fix was USD 1,657.00, GBP 1,077.09, and EUR 1,290.80 per ounce.
Cross Currency Table – Bloomberg
Spot gold rose on Thursday in Asia and has consolidated on those gains on somewhat subdued trading conditions.
There are hopes that new flows of funding from the International Monetary Fund will help contain the euro zone debt crisis. However, some investors are concerned that the funding is another form of short term debt based panacea and a further currency debasement.
IMF officials from twenty nations are set to hammer out a plan at a meeting in Mexico on Thursday and Friday. Another multibillion or even trillion dollar monetary injection into the global financial system may further boost demand for bullion.
XAU-GBP Exchange Rate – Bloomberg
The duty hike in India has decreased gold prices by 1% in Mumbai as the rupee gained 0.5% against the dollar.
Some jewellers think the recent duty may slow down demand and may result in a decrease in imports from the official channels of about thirty banks. The increased tax may also lead to a tertiary market where people trade amongst themselves and not through dealers.
Traders still do not see the hike dampening the demand for the yellow metal. India is the world’s largest importer of gold and its households have the largest holdings of the metal, according to data from the World Gold Council, although Chinese households appear to be catching up in their purchases of gold.
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