Gold prices at new all-time high, entering years-long bull run: Analysts

Investment in precious metal safe based on outlook for India in the next four months

Gold hit an all-time high on Monday as ties between China and the United States rattled investors, boosting the allure of safe haven assets. The metal was trading at $1,933 per ounce in the international market and in India it was above Rs 50,000 per 10 gram. A gold market cycle usually last 8-10 years, indicating that a bull run is underway. The last rally started in 2001 and ended in 2011, when prices went up sent times from the 2001 level. After peaking, prices fell 46 per cent and consolidated for years.

“Gold has entered a bullish phase that can last several years. We also think that there is better than 50% probability of gold approaching $3,000 in this cycle,” said US-based analyst Nigam Arora, author of the popular The Arora Report, a newsletter service on investments.

Christopher Wood, global head of equity strategy at Jefferies, last week said in a report that gold could rise to $4,000. Imports, in US dollars, decide gold price in India. The dollar may weaken due to Federal Reserve policies and the U.S government’s government, giving gold tailwind. Real interest rates are negative, helping gold.

Customs checks fail to curb duty free import of gold coins from South Korea

Already 12-13 tons of gold is understood to have arrived so far from Korea since July

economy news: Importers are exploiting a loophole in the Free Trade agreement signed between South Korea and India that allows for duty-free import of gold coins.

The customs department, after examining several recommendations such as levying a safeguard duty, is seeking a bank guarantee equivalent of the usual 10 per cent from traders to neutralise the impact of the clause.

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Customs department is seeking several details mostly pertaining to exporters, including manufacturing details and so on, in order to plug the surge of imports. According to informed sources, despite efforts to curb the yellow metal's import from Korea, it continues unabated. Indian importers are providing all information demanded by the customs department and providing the requisite bank guarantee too.

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Already 12-13 tons of gold is understood to have arrived so far from Korea since July.

The sources added it is apparent that importers are confident about the legality of their method from the way they are cooperating with customs, providing all information demanded of them in writing.(Read more)

GST woes: India's gold imports to fall in H2; smuggling seen rising, says WGC

There have been fears the tax increase could stoke under-the-counter buying in India

India's gold imports will likely drop in the second-half of the year from the first six months after jewellers rushed to stock up ahead of new taxes introduced on July 1, the World Gold Council (WGC) said on Thursday.

Faltering appetite in a country where gold is used in everything from investment to wedding gifts could rein in a rally in global prices, trading near their highest level in seven weeks. (economy policy)

"Expecting higher (taxes), certainly some of the imports and some of the demand from the second-half were advanced in the June quarter," Somasundaram PR, Managing Director of WGC's India operations, told Reuters.

As part of a new nationwide sales tax regime introduced in July, the goods and services tax (GST) on gold jumped to 3 percent from 1.2 percent previously. Jewellers have to pay that tax when buying gold imported by banks, while their customers must also pay when making purchases.

India is the world's No.2 gold consumer. The country's demand for the metal in the first-half rose 30 percent from a year ago to 298.4 tonnes, but imports during the period more than doubled to 518.6 tonnes, the WGC said in a report published on Thursday.

India's gold imports typically strengthen in the second-half of the year as the precious metal is considered an auspicious gift at festivals such as Diwali and Dussehra.

Indian gold demand is expected to remain subdued for a few weeks as "consumers who have recently purchased are unlikely to do so again in the short term", the WGC said.

There have been fears the tax increase could stoke under-the-counter buying in India, where millions of people store chunks of their wealth in bullion and jewellery.

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