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Gold Above $1300 An Ounce On Short Covering
Posted May 19th, 2014
Los Angeles CA, May 19 (Tangible Investments) - by James O’Dell - Gold broke above the key $1,300 an ounce level on short covering and bargain hunting on Monday, after easing a modest $3.50 or 0.27 percent on Friday to close at $1,292.60 an ounce, while still managing to rack up a 0.4 percent gain for the week. Silver slid $0.17 or 0.87 percent to close at $19.36 an ounce, as the gold/silver ratio climbed to 66.76.
Gold remains one of the year's best performing assets, having posted a 7.3 percent gain so far, spurred primarily by mounting tensions between the West and Russia over the annexing of the Crimean peninsula from Ukraine by Russia just weeks ago. Russia's President Putin reportedly ordered military troops currently massed along the Ukraine border, back to their home bases on Monday, now that spring maneuvers have ended. The move appears to be an effort on Putin's part to ease tensions in Ukraine before presidential elections take place on Sunday in Kiev. But there have been no apparent changes to Russian troop deployments, so far, according to a NATO spokesman.
Meanwhile, in India, new changes in government are rapidly favoring the yellow metal, after the Bharatiya Janata Party (BJP) pulled off a surprising landslide victory in last week's elections. Bullion dealers have renewed hope that the new Narendra Modi led government will eliminate the draconian gold import duties imposed by the outgoing UPA government. "The BJP has promised to review gold import duties within three months of coming to power,'' said Radhika Rao, of DBS. "With a stable Union government, the right policy decisions should be taken to bring the gold and diamond industry back on track. The government should also do away with the 80:20 rule which has increased gold smuggling in the country,'' said Manikbhai Zaveri, a bullion dealer.
In the meantime, India now has its first gold refinery ever to join the London Bullion Market Association's good delivery list, a global benchmark for quality. MMTC-PAMP, a joint venture between Swiss refiner PAMP SA and India's state owned MMTC, will join 70 other refiners on the LBMA list. "There was a lack of a credible refining facility, and now we have addressed that vacuum," said Rajesh Khosla, of MMTC-PAMP.
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