Gold rises on physical buying, outlook cautious
Gold rises on physical buying, outlook cautious
US durable goods data posted the biggest drop in seven months.
Some investors viewed the data as a sign the Federal Reserve would maintain its monetary stimulus at its policy meeting next week, boosting gold’s inflation-hedge appeal.
Brent crude oil jumped 1.4 percent and copper also surged. The higher industrial commodities prices lifted gold, but traders said signs of a continued US economic recovery will put a lid on gold’s gains.
“If recent numbers are any indication, the US economy is not terrible. The Fed watchers will likely begin to talk about a later time for a tapering of the stimulus. This will in turn boost the equities markets and leave gold flat,” said Carlos Santalla at commodities broker Marex Spectron.
Bullish remarks on gold by billionaire investor John Paulson also supported prices. Paulson told investors he is staying the course on gold even though there may be more short-term volatility in the price of the metal.
Spot gold rose 1 percent to $ 1,425.79 an ounce by 1900 GMT.
Gold has risen in six of the last seven sessions, after the metal sank a combined $ 225 on April 12 and 15 in a sell-off that surprised gold bulls.
US gold futures for June delivery settled up $ 14.90 at $ 1,423.70 an ounce.
Trading volume has slowed after surging to a record high last week. Turnover was around half of its 30-day average, preliminary Reuters data showed.
Investor confidence in gold is still reeling. Outflows from exchange-traded funds showed no signs of abating, in contrast to soaring demand for coins and bars which are favored by smaller retail investors as a store of value.
The Gold Trust, the world’s largest gold-backed exchange-traded fund, said its holdings fell 0.68 percent to 1,097.19 tons on Tuesday from 1,104.71 tons on Monday, the lowest level since October 2009.
Premiums for gold bars soared to multi-year highs in Asia after a spate of physical buying ran down supplies, with dealers in top consumer India expecting a surge in imports this month.
US physical gold demand also soared. The US Mint said it has suspended sales of its one-tenth ounce American Eagle gold bullion coins as surging demand after bullion’s plunge to two-year lows depleted the government’s inventory.
Among other precious metals, silver rose 0.9 percent to $ 23.11 an ounce.
A pick-up in manufacturing activity and an improving global economy should help silver’s fabrication demand recover this year, precious metals research firm Thomson Reuters GFMS said in a report.
In platinum group metals, platinum gained 0.9 percent to $ 1,426 an ounce, while palladium fell 1 percent to $664.97 an ounce.
Jordanian cabinet approves new IMF-guided tax law to boost finances
AMMAN: Jordan’s cabinet on Monday approved major IMF-guided proposals that aim to double the income tax base, as a key part of reforms to boost the finances of a debt-burdened economy hit by regional conflict.
“When only 4 percent of Jordanians pay (personal) income tax, this may not be the right thing,” Finance Minister Omar Malhas said in remarks after the cabinet meeting, adding the goal was to push that to eight percent. The draft legislation was submitted to parliament.
The IMF’s three-year Extended Fund Facility program aims to generate more state revenue to gradually bring down public debt to 77 percent of GDP in 2021, from a record 95 percent.
A few months ago Jordan raised levies on hundreds of food and consumer items by unifying general sales tax (GST) to 16 percent — removing exemptions on many basic goods.
In January subsidies on bread were ended, doubling some prices in a country with rising unemployment and poverty among its eight million people.
The income tax move and the GST reforms will bring an estimated 840 million dinars ($1.2 billion) in extra annual tax revenue that will help reduce chronic budget shortfalls normally covered by foreign aid, officials say.
Corporate income tax on banks, financial institutions and insurance companies will be pushed to 40 percent from 30 percent. Taxes on Jordan’s phosphate and potash mining industry will be raised to 30 percent from 24.
The government argues the reforms will reduce social disparities by progressively taxing high earners while leaving low-paid public sector employees largely untouched.
“This is a fair tax law not an unfair one,” said Malhas, who shrugged off criticism the law is lenient on many businesses connected to politicians whose transactions are not subject to tax scrutiny.
Husam Abu Ali, the head of the Income and Sales Tax Department, said a proposed IMF-recommended Financial Crime Investigations Unit will stiffen penalties for tax evaders. Critics say it will not tackle pervasive corruption in state institutions.
Abu Ali said the government could be losing hundreds of millions of dollars through tax evasion, which is as high as 80 percent in some companies.
The amendments lower the income tax threshold and raise tax rates. Unions said the government was caving in to IMF demands and squeezing more from the same taxpayers.
“It is penalizing a group that has long paid what it owes the state,” the unions syndicate said in a statement.
“It imposes injustice on employees whose salaries have barely coped with price hikes rising madly in recent years.”