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

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