March 2015 Review

China’s rumoured new yuan gold fix to rival London’s, reports that the gold price will double by 2030, the first LBMA auction takes place, and India reduces its tariff on gold and silver. Here are some of March’s gold and silver bullion news headlines.

China to launch yuan gold fix

China is rumoured to be launching a yuan-dominated gold fix later in the year. As the world’s largest consumer of gold, China has long been keen to play a greater role in the gold price fixing that’s taken place in London for the past century. This new fix will be in direct competition with the London Fix, or the newly established LBMA Gold Price, as the world’s premier for gold pricing. Last year, China opened the Shanghai gold exchange, which is based on physical gold rather than intangible contracts. It looks increasingly likely that a yuan-dominated gold fix is part of a long-term plan to become a world-leading gold exchange.

US Fed changes its view on low interest rates

The US Federal Reserve has reconsidered its stance on interest rates, which it’s kept at a record 0% low since the financial crash in 2008. Upon removing the word ‘patience’ from its regular policy statement, the markets jumped to the conclusion that the bank will be raising interest rates in the near future. The gold price rose on the news, as gold traditionally trades higher in a low interest rate environment.

Bullion news – Gold price to double by 2030, says report

According to the Australia and New Zealand Banking Group (ANZ) report, as incomes in Asia rise, the appetite for gold jewellery – especially in China and India – will also grow. This is predicted to raise the price of gold to $2,400 an ounce by 2030.

“The bedrock, the anchor of our views of increasing demand for physical gold, will come from rising incomes in Asia,” ANZ chief economist Warren Hogan told news channel Bloomberg. “Gold is going to have that investment role and it’s going to become more prominent.”

First LBMA auction takes place

The London Gold Fix was replaced by the new LBMA Gold Price. Run by the ICE Benchmark Administration (IBA), it carried out its first auction on 20 March 2015. The new system operates a physically settled, electronic and tradeable auction process. The price formation is in dollars and prices will continue to be set twice daily at 10:30 and 15:00 (London time) in three currencies: USD, EUR and GBP.

India reduces its tariff on gold and silver

India has reduced its import tariff value on gold and silver following weak international price trends. The tariff value is revised on a fortnightly basis after analysing the global price trend.

In November 2014, the RBI had eased restrictions on gold imports by scrapping the controversial 80:20 scheme. The 80:20 rule was put in place back in 2013 to curb high gold inflows that were widening the current account deficit – at least 20 per cent of the imported gold had to be mandatorily exported before bringing in new lots.

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