Gold fell for the fifth straight session on Wednesday, hitting a three-week low as the dollar strengthened to a six-week high versus the euro after weak euro zone data.
While gold has recovered around 7 percent from a two-year trough of $1.321.35 an ounce hit in mid-April, its safe-haven appeal has been battered by record-high U.S. equities and signs of an improving U.S. economy.
Spot gold fell 0.8 percent to $1,414.56 an ounce at 1000 GMT, having touched its lowest since April 23 at $1,408.19 earlier. Bullion was on track to post a daily fall for a fifth consecutive session, its longest run of losses since January 2011. It has fallen more than 14 percent so far in 2013 after gaining for the past 12 years.
U.S. gold futures for June fell 0.8 percent to $1,413.70 an ounce....MORE
The restrictions which were announced Monday could have a big effect, some analysts are talking a 50% reduction in imports.
From The Hindu's Business Line:
Mumbai, May 13:To moderate the demand for gold for domestic use, the Reserve Bank of India has decided to restrict the import of gold on consignment basis by banks only to meet the genuine needs of exporters of gold jewellery.This restriction, which has come into force with immediate effect, has been imposed in the backdrop of rising gold imports exerting pressure on India’s current account deficit.The RBI curb also comes on a day when government trade data showed that gold imports jumped by 138 per cent to $7.5 billion in April, highest so far this year, pushing up the trade deficit to $17.7 billion. This is likely to worsen the current account deficit (CAD) this fiscal.
Consignment basis
In the transaction involving import of gold on consignment basis, the ownership of the gold remains with the overseas supplier and the Indian importer acts as the former’s agent. The Indian bank remits the cost of import as and when the sale takes place.The CAD, which is a key indicator of a country’s external vulnerability, arises when a country’s total imports of goods, services and transfers’ is greater than exports.A widening CAD usually exerts downward pressure on the domestic currency, making imports costly. This is a cause for concern for the Government as costly crude oil imports have inflationary impact. The current account deficit reading came in at an all-time high of 6.7 per cent of GDP in October-December period of 2012-13.The restriction on the import of gold on consignment basis by banks comes as the RBI’s Working Group on Gold had recommended aligning gold import regulations with rest of the imports for creating a level-playing field between gold imports and other imports....MORE
Monday's move should not come as a surprise to anyone watching the world's largest gold market.
From Feb. 19:
Here's the recent action in the futures via FinViz, the low today was $1405.60:
With
gold imports putting pressure on the current account deficit (CAD), the
Reserve Bank of India (RBI) today imposed restrictions on import of the
yellow metal by banks.
"To moderate the demand for gold for domestic use, it has been decided to restrict the import of gold on consignment basis by banks, only to meet the genuine needs of exporters of gold jewellery," the RBI said in a statement.
As per a data released today by the government, gold and silver imports during April, 2013 jumped by 138 per cent to USD 7.5 billion against USD 3.1 billion in the year-ago period. Due to high gold imports, the country's trade deficit in April widened to USD 17.8 billion year on year.
Higher trade deficit in turn puts pressure on CAD, which has been described as the biggest risk to the Indian economy by the RBI.
The CAD, which is difference between the outflow and inflow of foreign currency, touched a record high of 6.7 per cent in the October-December quarter on the back of rising oil and gold imports.
The RBI's decision to impose restrictions on gold imports follows recommendations of a Working Group on Gold which had suggested aligning gold import regulations with rest of the imports for creating a level playing field between gold imports and other imports.
Nominated banks and agencies were permitted to import gold on loan basis, suppliers credit/buyers credit basis, consignment basis as also on unfixed price basis.
However, bulk of the gold imported is on consignment basis whereby nominated banks do not have to fund these stocks, RBI said.
- See more at: http://www.indianexpress.com/news/reserve-bank-of-india-puts-restrictions-on-gold-imports-by-banks/1115161/#sthash.NY36AwoF.dpuf
"To moderate the demand for gold for domestic use, it has been decided to restrict the import of gold on consignment basis by banks, only to meet the genuine needs of exporters of gold jewellery," the RBI said in a statement.
As per a data released today by the government, gold and silver imports during April, 2013 jumped by 138 per cent to USD 7.5 billion against USD 3.1 billion in the year-ago period. Due to high gold imports, the country's trade deficit in April widened to USD 17.8 billion year on year.
Higher trade deficit in turn puts pressure on CAD, which has been described as the biggest risk to the Indian economy by the RBI.
The CAD, which is difference between the outflow and inflow of foreign currency, touched a record high of 6.7 per cent in the October-December quarter on the back of rising oil and gold imports.
The RBI's decision to impose restrictions on gold imports follows recommendations of a Working Group on Gold which had suggested aligning gold import regulations with rest of the imports for creating a level playing field between gold imports and other imports.
Nominated banks and agencies were permitted to import gold on loan basis, suppliers credit/buyers credit basis, consignment basis as also on unfixed price basis.
However, bulk of the gold imported is on consignment basis whereby nominated banks do not have to fund these stocks, RBI said.
- See more at: http://www.indianexpress.com/news/reserve-bank-of-india-puts-restrictions-on-gold-imports-by-banks/1115161/#sthash.NY36AwoF.dpuf
With
gold imports putting pressure on the current account deficit (CAD), the
Reserve Bank of India (RBI) today imposed restrictions on import of the
yellow metal by banks.
"To moderate the demand for gold for domestic use, it has been decided to restrict the import of gold on consignment basis by banks, only to meet the genuine needs of exporters of gold jewellery," the RBI said in a statement.
As per a data released today by the government, gold and silver imports during April, 2013 jumped by 138 per cent to USD 7.5 billion against USD 3.1 billion in the year-ago period. Due to high gold imports, the country's trade deficit in April widened to USD 17.8 billion year on year.
Higher trade deficit in turn puts pressure on CAD, which has been described as the biggest risk to the Indian economy by the RBI.
The CAD, which is difference between the outflow and inflow of foreign currency, touched a record high of 6.7 per cent in the October-December quarter on the back of rising oil and gold imports.
The RBI's decision to impose restrictions on gold imports follows recommendations of a Working Group on Gold which had suggested aligning gold import regulations with rest of the imports for creating a level playing field between gold imports and other imports.
Nominated banks and agencies were permitted to import gold on loan basis, suppliers credit/buyers credit basis, consignment basis as also on unfixed price basis.
However, bulk of the gold imported is on consignment basis whereby nominated banks do not have to fund these stocks, RBI said.
- See more at: http://www.indianexpress.com/news/reserve-bank-of-india-puts-restrictions-on-gold-imports-by-banks/1115161/#sthash.NY36AwoF.dpuf
"To moderate the demand for gold for domestic use, it has been decided to restrict the import of gold on consignment basis by banks, only to meet the genuine needs of exporters of gold jewellery," the RBI said in a statement.
As per a data released today by the government, gold and silver imports during April, 2013 jumped by 138 per cent to USD 7.5 billion against USD 3.1 billion in the year-ago period. Due to high gold imports, the country's trade deficit in April widened to USD 17.8 billion year on year.
Higher trade deficit in turn puts pressure on CAD, which has been described as the biggest risk to the Indian economy by the RBI.
The CAD, which is difference between the outflow and inflow of foreign currency, touched a record high of 6.7 per cent in the October-December quarter on the back of rising oil and gold imports.
The RBI's decision to impose restrictions on gold imports follows recommendations of a Working Group on Gold which had suggested aligning gold import regulations with rest of the imports for creating a level playing field between gold imports and other imports.
Nominated banks and agencies were permitted to import gold on loan basis, suppliers credit/buyers credit basis, consignment basis as also on unfixed price basis.
However, bulk of the gold imported is on consignment basis whereby nominated banks do not have to fund these stocks, RBI said.
- See more at: http://www.indianexpress.com/news/reserve-bank-of-india-puts-restrictions-on-gold-imports-by-banks/1115161/#sthash.NY36AwoF.dpuf
