Two “critical” gold events could be happening right here, right now
From Pierce Points:
Two potentially big stories for gold are unfolding right now. In disparate parts of the globe.
First in terms of gold supply. In the world’s fifth-largest bullion producer: Peru.
Reports late last week from the Peruvian government show another notable decline in monthly gold output. With production for May falling 24.6% compared to the year-ago period. Equating to a loss of over 111,000 ounces for the month.
The drop in output continues a trend we saw the previous month. With April production figures down by over 116,000 ounces – or 26% – compared to April 2013.
This appears to confirm a trend toward declining output from this critical supplier. With the recent numbers pointing to a potential shortfall from Peru of around a million ounces for 2014 as a whole, as compared to last year.
That’s not a massive amount in a global sense. Representing about 1% of worldwide gold production. But it would tighten supply – helping put upward pressure on prices.
On the other side of the world, bullion demand could also get a shot in the arm. Within the next 24 hours.
That’s because of new budget measures set to be announced in India tomorrow. Where speculation is running high that the recently-elected federal government will finally ease gold import restrictions.
The local press quoted an unnamed source this week as saying that the budget will likely involve a reduction of import duties on gold. With the source saying, “We are looking at 6% [import duties] for sure.”
That 6% would be a big improvement for gold buyers. With current import taxes running a hefty 10% on gold bars and 15% on gold jewelry. The source further told the press that the new budget will either announce an immediate cut, or outline a path toward such.
Either case would be positive for demand in India, the world’s second-largest gold buyer. The budget will be officially announced at 11 am on July 10 (it’s 7 pm, July 9 in New Delhi as I write) – keep an eye out for a gain in gold prices on any positive announcements here in the next 24 hours.