Insights

Summary

• Indian gold imports were 62t in June 2019 – up slightly on the same month last year 
• The domestic gold price was 6.1% higher in June as compared to end of May
• With higher domestic gold prices, the local discount in the gold market reached $23/oz (1.6% to the international price) by end of June
• Higher and relatively volatile prices encouraged gold futures trading on MCX: volumes touched a high of 28.2t in June 

Intro: Central banks bought more gold in 2018 than at any time since the early 1970s – and the trend has continued this year. Isabelle Strauss-Kahn, Member of the Advisory Board of the World Gold Council, former Director of Market Operations at the Banque de France and former Lead Financial Officer at the World Bank, explains why.

Our Central Banks and Public Policy team have just published the results of the 2019 Central Bank Gold Reserves Survey. The survey gives a fascinating insight into the minds of central bankers and is especially timely since central banks continue to post record-breaking levs of net gold purchases in recent quarters.

For Australian precious metals investors 21 June was a momentous day, with the price of gold topping A$2000 per ounce for the first time ever. 

 Week ending 12 July 2019

Summary

• Shanghai Gold Benchmark price hit 319.2 yuan/gram – highest level since its introduction in April 2016
• Au(T+D)’s trading volume in June reached second highest level on record – 2,062t
• The local gold premium rose sharply 
• Imports continued to slide in May, dropping to 69t
• Gold withdrawals from Shanghai Gold Exchange (SGE) fell again last month 
• PBOC added a further 10t to its reserves in June

We will soon be launching two regular blog posts– monthly updates on India and China by Mukesh and Ray, our analysts in Mumbai and Shanghai. These monthly posts will provide a snapshot of the health of these two global heavyweights, which together account for around half of annual global consumer demand. 

Summary

• On 6th July, India’s gold import duty increased from 10% to 12.5% as part of a revenue-raising budget
• We believe it will have a negligible long-term effect on gold demand
• We think it may be a temporary measure: when the government’s books are in better shape we may see some of these tax increases rolled back
• The market will be supported by other government initiatives, including the structural reforms such as the India Gold Spot Exchange and plans to boost rural incomes

Having risen over 3% in May, the loco-China gold prices continued to soar in June. Au(T+D), the most liquid and margin-traded gold contract at Shanghai Gold Exchange, rose 8.71%, the best monthly performance in 3 years.

In the age of sustainability, having a socially and environmentally responsible business model is no longer a luxury. Consumers and investors, increasingly conscious of the impact commercial activities can have, are exerting pressure on businesses to ensure their practices are as ethical and responsible as possible.

Gold had its largest weekly move to the upside since April 2016 (LBMA 3.4%, XAU 4.3%) continuing its move higher for a fifth straight week–this was likely driven by the US dollar falling sharply (-1.4%) and the price of gold breaking out of the key technical resistance level of $1,365 (discussed in depth on Friday).