Gold Prices gain in Dollars but fall in Euros...
Recorded 20 January 2012
Transcript from 20 January 2012, written by Ben Traynor
Gold has risen in Dollar terms for the third week in a row. Friday afternoon's PM London Fix price came in at $1653 an ounce, making a 1.1% weekly gain.
Silver also gained, rising 2.4% to $30.36 an ounce.
Gold in Euros however was down on the week. This suggests that currency market moves remain a key driver of precious metals markets.
India announced higher import duties on gold and silver this week. Refined gold will be subject to a duty of 2% by value, while unrefined gold will be taxed at 1%.
Silver imports will be taxed at 6%.
Last year India imported 878 tonnes of gold. Had it imported none, it would not have had the large trade deficit that has contributed to the weakness of the Rupee.
By distinguishing between refined and unrefined gold, India may be hoping to boost its domestic refining industry. That way, it could at least make a small dent in its trade deficit.
Turning to the wider markets, and by Friday it was still unclear how large a loss private sector Greek bondholders will have to take. Banking sector representatives are hoping to stick to the 50% haircuts agreed last October.
However, it emerged towards the end of the week that this figure could rise to 75%.
The larger the losses banks take, the greater the risk of a European banking crisis.
However, if the writedown is too small, it risks leaving Greece unable to roll over debts that come due in March.
The Shanghai Gold Exchange will be closed all next week for the Lunar New Year holiday. As a result, physical gold activity is expected to be significantly reduced – which could result in more volatile, currency-driven gold and silver trading.
European leaders meantime will hope to see some resolution of the Greek debt question ahead of the World Economic Forum which begins in Davos on Wednesday.
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