Los Angeles CA, July 11 (Tangible Investments) - by James O’Dell - Gold and Silver prices remain on pace for a sixth straight weekly advance after Gold climbed $8.55 or 0.64 percent on Thursday to close at $1,335.40 an ounce, when questions arose concerning the health of a top-listed Portuguese bank, igniting fears of contagion and raising the possibility of yet another euro zone banking crisis. Silver added $0.30 or 1.42 percent to close at $21.43 an ounce, while the Gold/Silver ratio fell to 62.31.
"We did have a strong Gold rally during the last period of sovereign risk in Europe, so it's not surprising to see the market reacting like this," said James Steel, of HSBC. Gold also gained support after India's new Modi government stunned investors with its decision to keep the nation's Gold import duty unchanged at 10 percent in its budget on Thursday.
India's new Prime Minister, Narendra Modi, heads the pro-business Bharatiya Janata Party, and had indicated that he was willing to remove the Gold curbs before his election two months ago. "Our expectations have not been met," said Pankaj Kumar Parekh, of the Gems and Jewelry Export Promotion Council, representing 3,000 exporters.
India's biggest Gold trade group was expecting the import duty to be reduced to 6 percent in the first budget of Modi's newly elected government. "We will take up the matter with the finance ministry." Premiums that soared as high as $160 an ounce in December, were $10 an ounce on Wednesday, but are expected to double or even triple in the next few days. "This will essentially force jewelers, who were on the sidelines expecting a duty cut, to re-stock," said Sudheesh Nambiath, of Thomson Reuters GFMS.
The finance minister's decision to leave rates unchanged is also expected to exacerbate the rampant smuggling now taking place. The World Gold Council (WGC) estimates that between 200 and 250 tons of Gold has been smuggled into India since import controls were first introduced.
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