Gold News: Price Falls As Dollar Advances, India Maintains Import Duty
Gold News
Gold has fallen 7.1% from a five-month high of over $1,300 an ounce of January 22nd, the day the European Central Bank announced a plan to buy bonds to bolster European growth. Gold’s falling price has come as central banks outside the US race to trim domestic interest rates to stave off deflation and bolster flagging growth. While this would usually be bullish for gold, the expectation that the Federal Reserve will raise interest rates has gold investors worried that higher yields in the US will diminish gold’s attractiveness.
The market’s appetite for risk is very strong right now, as the US dollar is strong and the US equities have moved higher. The dollar climbed to its highest level in more than 10 years after the a measure of US consumer purchases rose in January. At the same time, the Nasdaq Composite Index closed above 5,000 for the first time in 15 years on Monday, while the Dow Jones Industrial Average and Standard & Poor’s 500 Index reached records.
The precious commodity also wasn’t helped by data from India. India, which is among the world’s biggest consumers of gold, released details on its government budget, in which it did not lower duties on the import of gold into the country. The soaring dollar makes gold more expensive for buyers in other countries, including India, as they must exchange more of their currency for dollars to purchase the yellow metal. The announcement that the import duty would remain at a record 10% is a setback, and demand in India was expected to spike if the duty was decreased.