Gold Jumps as Portugal Bank Crisis Hits Shares, BJP's Budget Fails to Cut India's Anti-Import Rules
Thursday, 7/10/2014 14:08
GOLD PRICES jumped in London trade Thursday, gaining almost $15 in 30 minutes as European shares, currencies and bonds sank on a fresh crisis in Portugal's banking sector.
Indian gold prices had earlier jumped 1.5% after new finance minister Arun Jaitley failed to change or even address the world No.1 consumer market's strict anti-import rules – imposed last year to reduce India's large current account deficit with the rest of the world.
Share trading in Lisbon-listed
Banco Espirito Santo (ELI:BES) was halted Thursday morning after the stock sank more than 17%.
Now accused of hiding a €1.3 billion ($1bn) hole in its accounts, parent company Espirito Santo International last week missed debt repayments to "a few clients", a statement says.
Dollar gold prices touched their highest level since mid-March at $1344 per ounce, while silver briefly rose through $21.50, a new 15-week high of its own.
The Euro dropped to $1.36, driving up gold prices for Eurozone investors near the highest levels in 10 months above €985 per ounce, while stock in Europe's 100 largest equities fell to 2-month lows, some 3.6% below end-June's new 8-year highs.
Portuguese government bond prices fell hard, driving 10-year yields near 4.0% after hitting 9-year lows of 3.2% one month ago.
Scores of people were meantime reported dead in Gaza as the Israeli army and what newswires call "jihadi militants" exchanged missile fire.
Jaitley's failure to cut India's gold import duty "will essentially force jewellers, who were on the sidelines expecting a duty cut, to re-stock," says data and analysis consultancy Thomson Reuters GFMS's Sudheesh Nambiath, forecasting a tripling to $30 per ounce in India's domestic gold price premiums.
"Our expectations have not been met," says Gems & Jewellery Export Promotion Council vice-chair Pankaj Kumar Parekh, representing some 3,000 export businesses.
"We will take up the matter with the finance ministry."
Only yesterday Reuters quoted All India Gems & Jewellery Trade Federation (GJF) director Bachhraj Bamalwa saying he'd met Jaitley in late June, and found him "positive.
"We expect some good news about the industry," he said, predicting a cut in import duty from 10% to 6%.
Last week, the GJF chairman Haresh Soni – representing some 300,000 members –
called for India's Budget to cut gold import duty because of the "parallel economy" it has created.
Fighting smuggling and corruption were major planks of BJP leader Narendra Modi's election campaign. He specifically blamed the anti-gold import rules for boosting the black market in February.
The
BJP's manifesto was silent on gold, however, including no mention of the jewelry industry or import rules.
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