Gold Edges Higher on Speculation India Will Allow More Imports

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Gold Edges Higher on Speculation India Will Allow More Imports

Gold futures increased for the first time in three days on hopes that the new regime in India will ease import restrictions to boost the metal’s demand.

India is the second-biggest buyer of gold after China and is likely to reduce the 10% import tax on gold in July and ease restrictions on importers, according to Bachhraj Bamalwa of All India Gems & Jewellery Trade Federation. Governor of the Reserve Bank of India Raghuram Rajan said last week that the newly appointed finance minister will make a decision on relaxing restrictions.

“There is a lot of optimism that India will slash the tariff rate. People expect India’s demand to rise in the second half of the year,” Tommy Capalbo of New York-based Newedge Group told Bloomberg in a phone interview.

June-delivery gold futures added 0.4% to $1,298.80 per ounce as of 11:05 on the Comex in New York. Through Sunday, process advanced 7.6% in 2014 as geopolitical events in Ukraine showed signs of escalation.

The European Central Bank and 20 central banks within the euro zone said in a joint statement that gold was still a key component of monetary reserves on a wide scale. The banks agreed to their fourth gold accord, which for the first time put no curb on sales.

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“The signatories note that, currently, they do not have any plans to sell significant amounts of gold,” the statement added.

Bernard Sin of refiner MKS in Geneva said the announcement by the central banks was a boost for the precious metal because it indicated that it would continue playing a central role as part of reserves for the regulators.

However, speculations that the ECB might reduce interest rates in the near future to prop the euro region economy, most likely early June, are making gold perform unpredictably, Reuters reported.

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To contact the reporter of this story; Jonathan Millet at john@forexminute.com