CFDs: Silver price shrugs off suspension of US debt ceiling

Meanwhile, in a research note published yesterday analysts at HSBC said the fact that India’s trade deficit narrowed in January raised optimism that the government may relax bullion import restrictions, a move which would be supportive for gold and silver prices.

India’s trade shortfall for January shrank to $9.91 billion from December’s $10.14 billion, comfortably beating the consensus for a widening to $12.63 billion. The Indian trade ministry said yesterday that the combination of a 77 percent fall y/y in the imports of gold and silver and a rise in exports had helped improve the outlook for the country’s current account balance.

According to Reuters, the ministry is now recommending an easing of the restrictions placed on gold and silver imports.

In the view of HSBC strategists, if the Indian authorities are “less concerned with the economic ramification of a lower trade and current account deficit, then it is possible that India’s trade restrictions on gold[and silver] imports will eventually be tempered or the tariff reduced”.

That happening would in turn, HSBC argues, increase demand, which would be bullish for bullion prices.

Last September, the Reserve Bank of India imposed curbs on bullion imports, citing gold and silver purchases as the main cause for the country’s mushrooming current account deficit. The currencies of emerging market countries with high current account deficits as a percent of GDP have taken the biggest hit since the US Federal Reserve first raised the prospect of a tapering of its quantitative easing programme.

Currently, silver is trading at around $20.293, up 0.33 percent intraday.