Gold still has its fans

Even though the price in the spot market has failed to inspire confidence that the precious metal will head higher, physical demand remains strong.

The rebalancing of demand for gold has continued throughout the year, with paper traders continuing to outnumber their physical counterparts. The weight of expectation continues to hold back the gold price, as a number of global events have been unable to trigger a shift in this consensus.

One of the bigger questions hanging over the metal is whether, if the very real possibility of military action in the Mediterranean involving both Russia and the US was insufficient to prompt a bull-run on gold, anything can do so. The actions we have seen during 2013 go some way to disproving gold’s historical reputation as a safe-haven investment.

The Indian government has seen the rupee battered over the last year-and-a-half, and in an effort to tackle this has raised the tariff for importing gold three times this year. After some tinkering, this currently stands at US$414 per 10 grams. Even with this being the case, 2013 looks set to be a record year for Indian gold imports.

Spot gold chart

This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.