The gold price retreated from its two-month high yesterday, falling by 1% as US equities steadied and jittery speculators prepared themselves for the FOMC meeting which commences today.
At the moment sentiment over the outcome of the FOMC meeting appears to be mixed, with some believing a further $10billion will be tapered from the monthly asset purchases, whilst others believe it will be too much too soon.
Gold has managed to stand strong against this usual taper tic we see before every meeting thanks to the currencies of various emerging markets coming under stress, namely the South African rand, the Turkish lira and of course the Argentinian peso. These currency moves have seen investors turn to safe havens, namely gold and US Treasuries.
India to review gold controls
India’s Revenue Secretary Sumit Bose yesterday confirmed Finance Minister P. Chidambaram’s comments that there is likely to be a review on the gold controls by the end of March. The government have long said that gold controls will remain in place until the current account deficit is brought ‘under control.’ This fiscal year is expected to show a current account deficit of $50 billion, a significant improvement from the expected $70 billion, and the record $87.8 billion recorded last year.
China defies gold price slump
The Hong Kong Census and Statistics Department data showed yesterday that imports China’s December net gold imports from Hong Kong rose 24% from November. This brings official purchases to 1,158 tonnes in 2013, a climb of 33% since 2012. See ours and Koos Jansen’s earlier work on this.
Speaking to Bloomberg, Song Heping, assistant general manager at Xiamen City Commercial Bank Co said, “Increasing disposable income guaranteed healthy demand for gold in China last year… December demand is usually strong before the Chinese New Year as consumers buy gold gifts regardless of the price outlook at this time of the year.”
Will the Chinese get a London Fix seat?
Last week we wrote about the London Gold Fix, within our article we explained that Deutsche Bank were looking to sell their place at the price fixing table. Yesterday Reuters reported that the bank has begun talks to sell the seat and are awaiting clarification from the LBMA as to whether or not the buyer must be one of the current makers.
If the new member of the gold/silver fix does not need to be a current market maker then this opens the door for Asian banks, namely the ICBC and the Bank of China, both of whom are members of the LBMA.
Platinum strikes ongoing
Talks between the AMCU union and South Africa’s top-three platinum mines broke down yesterday as no agreements were reached. Platinum rose on the back of the discontent. According to Reuters the strike has impacted half of the global output of the industrial precious metal.