The Gold price is holding steady below $1,300 this morning ahead of the FOMC statement release. There is rife speculation amongst analysts that the FOMC will decide to cut the Federal Reserve’s monthly asset purchases by $10 billion to $45 billion.
Gold is still up for the year, by 7.8%, mainly thanks to sustained buying in Asia and renewed safe-having demand due to ongoing tensions between Russia, Ukraine and the West.
For a sixth consecutive day, assets in the SPDR Gold Trust remain unchanged at a 12-week low of 792.14 metric tons.
India’s gold exports clim
Last quarter the Reserve Bank of India allowed more banks to import gold, as a result of this relaxation in supply restrictions gold jewellery exports rose for the second month in March. The exports came to 50 tonnes, almost double those of the previous month. This will come as a relief to artisan jewellers who saw gold jewellery exports fall by 40% in the fiscal year ended March 2014.
One less on gold fix
Deutsche Bank has resigned its seat on the London Gold Fix, despite being unable to find a buyer. There were rumours earlier in the year that London-based Standard Bank, which is 60% owned by China’s ICBC, was in the running to buy the seat. The fact that the seat has gone unsold, leaving just four banks involved in the fixing process, has raised questions over the future and stability of the historic price-fixing process.
What does this mean? The Wall Street Journal reports, “I guess if you want to get a snapshot of what large institutional players are thinking—which is what the fix is really about—then the more people you have [on the panel] that are dealing with large institutional players the better,” said Brian Lucey, a finance professor at Trinity College Dublin who has studied the gold market. “More is better in terms of taking a temperature of the market.”
“Deutsche Bank is resigning its position on the gold and silver benchmark setting process,” the bank said in a statement to Bloomberg today. “We remain fully committed to our precious metals business.”
China gold imports set to fall
According to Standard Chartered gold imports by China are likely to fall over the coming months, but imports by India are likely to continue to pick up. The weakening of the yuan is the main reason for the bank’s China forecast, it means that purchases of domestic gold will be favoured over that from abroad. Imports for March fell to 80.6 tonnes in March, down from 111.4 in February and 130 tonnes the previous year.
Silver investment demand falls
Data from CPM group shows that Silver investment has fallen but fabrication demand has increased. Kitco reports that the consultancy report forecasts net investment demand to slip further this year to 86.9 million ounces. “These purchases are large and should prevent prices from declining significantly during 2014, but this level of investment demand is not strong enough to drive silver prices sharply higher.” According to CPM Group, “Silver prices are forecast to consolidate during 2014, potentially moving higher during the latter half of the year.”