Precious Metals Price Watch: Gold Steadies After ECB Keeps Rates Flat

on Jun 6, 2013
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Gold steadied above $1,400 an ounce today, June 6, as investors turned their attention to upcoming US jobs data and comments from European Central Bank (ECB) president Mario Draghi after the bank left interest rates unchanged. Earlier in the day, the gold price was under pressure due to India’s decision to increase the import tax on the precious metal. The silver price also edged up, erasing earlier losses.

**Gold Price Claws Back Losses**
Spot gold rebounded from initial losses to $1,403.56 an ounce, up 0.1 percent by 11:58 GMT, whereas US gold for August settlement was up 0.3 percent at $1,403.30 an ounce. The newswire quoted Danske Bank (CPH:DANSKE) analyst Christin Tuxen as commenting that investors were waiting to see whether the ECB president Mario Draghi would talk about negative interest rates.

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“And of course people are looking at tomorrow’s US non-farm payrolls, which will be instrumental to judge whether the Fed tapering is going to come sooner rather than later,” she added, noting that this was “the big question for everything that is dollar sensitive at the moment, including gold”. The US Federal Reserve has linked its monetary stimulus, which in recent years has supported the gold price, to the health of the US jobs market.

**India Raises Gold Import Tax**
Gold came under pressure earlier during the day with news that India had increased its import tax fuelling concerns about physical demand given that the country is the world’s biggest gold consumer.
Bloomberg quoted India’s Revenue Secretary Sumit Bose as saying yesterday that the tax on bullion imports would rise to eight percent from six percent, effective immediately. The duty on platinum imports was also increased to eight percent from six percent.

“Physical demand at these sort of price levels is still very strong and the Indian government wants to curb imports,” said Robin Bhar, an analyst at Societe Generale SA (EPA:GLE), as quoted by Bloomberg. “It will have an impact on demand because already we’re seeing a whole raft of restrictions announced.”
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The All India Gems & Jewellery Trade Federation has forecast that gold imports may decline 20 percent in 2013. HSBC (LON:HSBA, NYSE:HBC, HKG:0005) analyst James Steel has said that while the duty hike may make bullion more expensive in India, gold is still trading at lower levels in local currency terms compared to last year and is still attractive to physical buyers.
**Silver, Platinum Price Erasing Declines**
The silver price was also up on June 6, with cash silver gaining 0.4 percent to trade at $22.60 an ounce. The platinum price tracked gold and silver higher, adding 0.2 percent to $1,512.50 an ounce.
The US Mint might resume making American Eagle platinum bullion coins in 2014 after receiving requests from dealers, Reuters quoted the acting director of the US Mint, Richard Peterson, as saying yesterday. He also said that the appetite for American Eagle gold and silver bullion coins was still at unprecedentedly high levels.

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Commodity Precious Metals