Gold prices remain stuck in a narrow range between $1,290 and $1,305, the downside being limited by geopolitical concern and the upside being capped by generally good US data, which suggest the US Federal Reserve will persist with the current pace of stimulus tapering.
Official demand for physical gold from India is expected to increase as the Reserve Bank of India (RBI) is expected to relax some of the restrictions imposed on the importing of gold.
Earlier this week, the RBI gave permission to "star trading houses" and private jewellery exporters, which had been barred from importing gold since July 2013, to resume imports, with immediate effect.
Ever since the Indian government imposed restrictions on gold imports, smuggling has increased substantially, which comes as no surprise, except to those government officials who thought their draconian actions would reduce gold demand and prompt individuals to hold more fiat currency instead of gold.
Recent data released by the Central Board of Excise and Customs (CBEC) in India showed that the smuggling of physical gold soared six-fold during the fiscal year ended this March 31 compared to the previous year.
The actual gold smuggled into the country is feared to be much more as Directorate of Revenue Intelligence estimates show that only one-tenth of the smuggling acts are caught by authorities.
According to the CBEC, the primary source of smuggled gold into the country is Dubai. And, recently, the World Gold Council reported a substantial increase of gold imports by neighbouring countries such as Nepal, Bangladesh and Sri Lanka.
I expect to see prices supported by increased demand from India and from further safe-haven buying from investors due to the continuing crisis in Ukraine.
However, I don’t think this increased demand will be enough to push prices above the resistance of $1,310 an ounce in the short-term, and thus I expect to see further sideways action.
For the past few weeks, the price of silver has been mostly directionless as prices remain stuck in a trading range of between $19/oz and $20/oz.
The company that runs the London silver fixing, a benchmark dating back more than a century that allows everyone from miners to jewellers to trade and value the metal, will stop operations on August 14.
The silver fixing takes place each day at noon by phone between the three members, who declare how much metal they want to buy or sell for clients, as well as their own accounts.
The first silver fixing took place in 1897 at the office of Sharps & Wilkins.
Deutsche Bank AG, HSBC Holdings Plc and Bank of Nova Scotia will remain the three members of the company, which will continue to liaise with the UK Financial Conduct Authority (FCA) and other stakeholders, the London Silver Market Fixing Ltd said in a statement.
In January this year, Deutsche Bank said it planned to withdraw from the London gold and silver fixings as it scales back its commodities business. And, last month, after failing to find a buyer for their seat, the bank said it would resign from the fixings.
The bank was asked by the FCA to stay on with the silver fixing for another 90 days, according to a person familiar with the request, who asked not to be identified because the information is private.
Source:- bdlive.co.za
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