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Gold set for weekly dip as India import duty hike adds to headwinds

July 1, 2022By Reuters

July 1 (Reuters) – Gold fell below USD 1,800 on Friday en route to a third straight weekly dip as a stronger dollar and prospects of higher interest rates eroded its safe-haven appeal, with an import tax hike by India also seen dampening demand for bullion.

Spot gold fell 0.6% to USD 1,795.89 per ounce by 0925 GMT, after touching its lowest since May 16 at USD 1,791.30.

US gold futures GCv1 dipped 0.7% to USD 1,795.10.

Coming off their worst quarter since early 2021 amidst aggressive monetary policy from top central banks, non-interest bearing gold has lost about 1.7% so far this week, with a stronger dollar heaping further pressure.

The ECB is also likely to start raising rates this month.

“Despite the current risk off mood and with financial markets a ‘sea of red’, the go-to safe haven just now is the US dollar,” rather than precious metals, independent analyst Ross Norman said.

Norman said “the very significant increase in import duties in India” had also hurt prices.

India, the world’s second biggest bullion consumer, raised its basic import duty on gold to 12.5% from 7.5% in a bid to bring down the trade deficit.

Gold’s retreat came despite data showing euro zone manufacturing production fell last month for the first time since the initial wave of the COVID-19 pandemic two years ago.

Spot silver fell 2.1% to USD 19.82 per ounce, and has dropped about 6.3% this week.

Silver was suffering because of its greater industrial exposure with investors fearing a global recession was looming, Rupert Rowling, market analyst at Kinesis Money said, adding that silver “seems unable to find any footholds”.

Platinum slipped 1% to USD 885.31, and faces a fourth consecutive weekly fall. Palladium dropped 1.1% to USD 1,915.04, but has gained about 1.5% this week.

(Reporting by Arundhati Sarkar in Bengaluru; Editing by Edmund Blair)


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