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Gold rises as equities falter

Published: 00:11 20 May 2014 AEST

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Gold moved higher to edge just above the US$1,300 mark again as equities and the US dollar weakened.

The spot price inched higher last week on mixed economic data from the US and the victory India for Narendra Modi’s pro-business BJP.

India has traditionally been the major market for gold but has seen demand severely curbed by controls imposed by the outgoing government.

Under the previous administration, gold import taxes rose to 10% from 2% while jewellers had to re-export 20% of imported gold imported.

The hope now is that some of these restrictions will be relaxed especially in the Indian rupee starts to recover.

Prior to the curbs being impose India was the largest consumer of gold globally, though it was overtaken by China last year, and the metal remains extremely popular among Indian consumers.

Commerzbank commented that the introduction of the import restrictions almost a year ago had brought about a slump in Indian 

gold demand in the second half of 2013. 

Accordingly, a relaxation of the would lend support to the gold price especially as the gold price in rupee terms has fallen to a four-month low.

Shortly after the start of US trading, spot gold was about US$9 higher at US$1,301. 

Holdings of gold in SPDR Trust, the largest of the gold-back exchange traded funds, fell Friday to US$782 tonnes. 

Elsewhere, platinum rose US$16 to US$1,476 as the ongoing strike in South Africa shows no signs of ending despite attempts last week to engineer a return to work.

Silver added US$0.19 to US$19.53.

Major movers

Randgold Resources added 35p to 4,559p

Fresnillo up 17p to 853p

Anglo American down 5p at 1,556p


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