The gold price has benefited in recent days from the uncertainty surrounding the situation in Crimea, sending the yellow metal to four-month highs. However, this morning Putin has held a fireside style press-conference during which has said that there is no need for bloodshed in the large Russian port city and he will not be sending troops to the city…just yet.
The action in Ukraine has led to many new forecasts being released, with some calling for $1,400/oz gold. One of these calls come from Mark Keenan, of SocGen. Whilst he remains bearish in the long-term (calling for $1,050/oz) he is confident that events in the short-term could send it above the key $1,350/oz resistance level.
HSBC meanwhile has retained its average price for 2104 at $1,292. The bank expects there to be lower levels of volatility and for the gold price to be supported by reduced mine supply and central bank demand. The bank believes buyers, and current holders of gold-backed ETFs, will adopt a buy and hold strategy, which will help the gold price. Scrap supply is expected to increase somewhat as the gold price also climbs.
Silver imports slow in India
The last year has been one of turmoil for India’s gold market, aside from the current account the only thing to have benefited are silver imports. Last year silver imports tripled from the previous year to a record 5,478 tonnes. Those in the metals industry imported silver in 2013 to ‘stay afloat’ according to Reuters, as the gold market forced them to look for other means to stay in business.
India accounts for 20% of the world’s silver demand, much of it in the form of jewellery but also investment silver. However, in anticipation of gold import restrictions being loosened there has been a fall in silver imports. The fall is also being blamed on the upcoming elections which, according to Reuters, means there is less ‘idle money’ floating around.
Expectations that gold import restrictions will be relaxed came about after Finance Minister P. Chidambaram said he would review the current regulations ahead of the May elections. Earlier this morning Trade Minister Anand Sharma told a news conference that he called upon the Finance Ministry to ease off on the restrictions. Reuters quote Sharma saying, “We have to have a balance. Over-regulation, too much of tariffs, lead to another problem … of smuggling…We have to ensure adequate availability of gold for the gems and jewellery industry, which is a very important sector for our exports.”
Platinum premiums climb
We haven’t mentioned it for a while but South Africa’s platinum and palladium mining industry has been under pressure for some time, thanks to industrial action at the country’s largest mines. This morning the Association of Mineworkers and Construction Union (AMCU) adjusted their demands to a mere doubling of the wage but to be increased over a period of three years.
The platinum and palladium markets have come under some pressure, as a result of the strikes. According to Heraeus supply is tightening whilst premiums continue to climb.