Gold fell $16.70 or 1.29% yesterday and closed at $1,275.70/oz. However, gold rose in Asian trading after Fed Chairman Ben Bernanke said that the central bank may start scaling back bond purchases later this year.
Mark O’Byrne from GoldCore stated that “Gold’s value signifies a very tight physical market and premiums in China remain high. This would ordinarily lead to a rally but the COMEX paper players remain dominant for the moment.”
Gold briefly spiked over $1,300/oz yesterday after Bernanke said the Fed’s monetary policy isn’t on a “preset course” & starts of new U.S. homes unexpectedly fell sharply leading to renewed concerns about the U.S. housing market. Analysts were confused as to the reason for the falls and they came despite a lack of market catalyst.
Despite much negative comment after the recent sharp decline in gold imports into India, India is set to see higher gold imports in 2013 than in 2012. India’s gold imports are set to fall in the second half as the government curbs shipments in a misguided attempt to prevent a further devaluation of the rupee. However, if current trends continue, India is set to see full year imports rise from 860 tons in 2012 to 902 tons in 2013 or a gain of nearly 5%. Inbound shipments may drop 22% to 372.5 metric tones in the six months through December from 478 tones a year earlier, according to a median of estimates from 10 importers, jewelers, analysts and trade groups compiled by Bloomberg. The full-year import estimates of 902 tons this year from 860 tons in 2012 are according to Bloomberg calculations based on data from the World Gold Council and the All India Gem & Jewelry Trade Federation.
Store of wealth buyers throughout Asia and the Middle East, from Turkey to Dubai to India and to China, crowded retail outlets and bullion dealers to buy jewelry in April after the precious metal posted the biggest two-day loss in three decades. Demand has fallen from the record levels seen then but remains very robust. As speculators in the west liquidate paper gold positions, the wealthy, middle classes and poor of the Middle East and Asia continue to buy gold jewelry as a store of wealth to protect primarily from the risk of currency devaluations.