Higher prices keep buyers at bay; India discounts at 6.5-month high

Gold (AFP /Chandan Khanna)
Updated 23 March 2018
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Higher prices keep buyers at bay; India discounts at 6.5-month high

MUMBAI/BENGALURU: Physical gold demand in Asian hot spots slouched this week as higher global prices made buyers hold off on purchases and as discounts in India widened to their highest in 6-1/2 months.
“Demand is very weak. At the current price level, retail buyers and jewellers are not making purchases,” said Ashok Jain, proprietor of Mumbai-based wholesaler Chenaji Narsinghji.
Dealers in India were offering a discount of up to $7 an ounce over official domestic prices, compared with a $3 discount last week. The domestic price includes a 10 percent import tax.
In the local market, gold was trading at around 30,800 rupees per 10 grams on Friday, not far from a 15-month high of 30,839 rupees hit last month.
“If prices remain at the current level then demand will remain subdued. Imports would be significantly down this month,” said N. Vijay, a bullion dealer from Salem in the southern Indian state of Tamil Nadu.
India’s gold imports in February dropped a quarter from a year ago to 63 tons as higher prices curtailed demand in the world’s second-biggest consumer of bullion, provisional data from precious metals consultancy GFMS and bank dealers showed.
In top consumer China, physical gold demand did not see much of a shift from last week due to higher global prices.
Spot gold prices hit their highest in more than a month on Friday as renewed trade war fears between the United States and China dragged the US dollar down, prompting safe-haven buying.
Investors scurried to safety after US President Donald Trump moved toward long-promised anti-China tariffs, prompting a response from China amid fears of a global trade war.
“Physical demand for gold remained low but steady,” said Peter Fung, head of dealing at Wing Fung Precious Metals in Hong Kong.
“Premiums have been at the same level over the last couple of days, indicating that physical demand-wise, the market hasn’t changed too much (from last week).”
Premiums in China remained unchanged from last week at $8 an ounce over benchmark prices, while premiums in Hong Kong hovered around $1 to $1.50 an ounce range, compared with 60 cents to $1.20 an ounce last week.
Meanwhile in Japan, physical demand was weaker than last week as higher prices in the local currency prompted selling, a Tokyo-based trader said.
Premiums were at 50 cents an ounce over benchmark rates, compared with 50 cents to 75 cents last week.


French state-owned bank drops plan to aid trade with Iran

Updated 21 min 43 sec ago
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French state-owned bank drops plan to aid trade with Iran

  • US-imposed sanctions sanctions iare making trade with Iran increasingly difficult for European companies - such as Volvo
  • US is renewing sanctions on Iran after withdrawing from a nuclear deal forged in 2015 between Tehran and world powers

PARIS: French state-owned bank Bpifrance has abandoned its plan to set up a mechanism to aid French companies trading with Iran, in the face of US sanctions against Tehran.
Earlier this year, the bank had said it was working on a project to finance French companies that wished to export goods to Iran despite US sanctions.
“It’s put on hold,” said Nicolas Dufourcq, Bpifrance’s chief executive. “Conditions are not met (...) Sanctions are punitive for companies.”
Bpifrance was working on establishing euro-denominated export guarantees to Iranian buyers of French goods and services. By structuring the financing through vehicles without any US link, Bpifrance thought it was possible to avoid the extraterritorial reach of US legislation.
Dufourcq’s latest comments show how the scope of the sanctions is making trade with Iran increasingly difficult for European companies.

Swedish truckmaker Volvo has been forced to stop assembling trucks in Iran as it can no longer get paid with US sanctions taking bite.
Volvo spokesman Fredrik Ivarsson said due to the sanctions Volvo could no longer get paid for any parts it shipped and therefore had taken the decision to not operate in Iran.
"With all these sanctions and everything that the United States put.. the bank system doesn't work in Iran. We can't get paid... So for now we don't have any business (in Iran)," he said.
The US is renewing sanctions on Iran after withdrawing from a nuclear deal forged in 2015 between Tehran and world powers. Washington reimposed some of the financial sanctions from Aug. 6, while those affecting Iran’s petroleum sector will come into force from Nov. 4.
Even though several European countries have said they are seeking to protect their companies from the sanctions, several major companies including oil company Total, Air France-KLM and British Airways have announced they would suspend activities in Iran.
German officials have in recent weeks advocated for the creation of an independent system for cross-border payments to make trade with Iran possible even with the US sanctions.
European Union diplomats have said US President Donald Trump’s positions on trade and on Iran were fueling a rethink about the EU’s dependency on the US financial system.
However, European countries appear to be struggling to find or agree on effective options to tackle the issue.