Petri Oeschger
Gold prices ticked up on Wednesday against a firmer dollar index (DXY), as investors braced for key U.S. economic data due later this week, while major gold importer India’s recent cut in customs duties on the yellow metal is expected to boost retail demand.
Spot gold (XAUUSD:CUR) up +0.09% at $2,410.68 an ounce, has risen about 4% so far this month, as investors await additional insights into the U.S. central bank’s interest rate cut path. As such, the U.S. second quarter GDP and the core personal consumption expenditure price index should offer some clues.
“Sentiment was also bolstered by the prospect of stronger physical demand in India. The government slashed its imports tax on gold to 6% from 15%, which should support jewellery manufacturing in the world’s second-biggest consumer of the precious metal,” ANZ Research analysts said. This adds to an already favorable backdrop for demand.
Experts believe the duty cut could curb smuggling and revive retail demand. The country’s Finance Minister Nirmala Sitharaman also announced an exemption on import duties for 25 critical minerals, including lithium, a key component in electric vehicle batteries, in an effort to secure a steady supply of these essential materials.
Elsewhere, African nations are reportedly rushing to build their gold reserves to hedge against geopolitical tensions that have battered their currencies and fanned inflation.
At least six are building up gold reserves or considering it, with South Sudan’s central bank Governor James Alic Garang reiterating over the weekend that the nation plans to expand its reserve base by adding other resources such as gold, Bloomberg reported. “We are in the stage of preparing policy documents and studying examples of other countries and lessons drawn,” Garang said.
Among other metals, copper prices (HG1:COM) ticked lower on Wednesday, hitting its lowest levels in nearly four months, pressured by demand concerns in top buyer China. The recently concluded Third Plenum also failed to inspire confidence that China was on track to lift economic growth.
Recent Commodity Price Movements and A Look At Some ETFs
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Energy
- Crude oil (CL1:COM) +0.20% to $77.60.
- Natural Gas (NG1:COM) -1.69% to $2.15.
Metals
Agriculture
- Corn (C_1:COM) -3.93% to $400.84.
- Wheat (W_1:COM) -0.40% to $540.61.
- Soybeans (S_1:COM) -0.32% to $1,113.08.
Commodity ETFs
Gold ETFs:
- SPDR Gold Shares ETF (GLD)
- VanEck Gold Miners ETF (GDX)
- VanEck Junior Gold Miners ETF (GDXJ)
- iShares Gold Trust ETF (IAU)
- Direxion Daily Gold Miners Index Bull 2X Shares ETF (NUGT)
- Sprott Physical Gold Trust (PHYS)
Other Metal ETFs:
- iShares Silver Trust ETF (SLV)
- Sprott Physical Silver Trust (PSLV)
- Global X Silver Miners ETF (SIL)
- U.S. Copper Index Fund, LP ETF (CPER)
- abrdn Physical Palladium Shares ETF (PALL)
Oil ETFs:
- U.S. Oil Fund, LP ETF (USO)
- Invesco DB Oil Fund ETF (DBO)
- U.S. 12 Month Oil Fund, LP ETF (USL)
- U.S. Brent Oil Fund, LP ETF (BNO)
- U.S. Natural Gas Fund, LP ETF (UNG)
- U.S. Gasoline Fund, LP ETF (UGA)
Agriculture ETFs:
- Invesco DB Agriculture Fund ETF (DBA)
- Teucrium Soybean ETF (SOYB)
- Teucrium Wheat ETF (WEAT)
- Teucrium Corn Fund ETF (CORN)
Insight: The lowered customs duties on gold by India could not only boost retail demand but also have a positive impact on the jewelry manufacturing sector in the country. This move aligns with India’s efforts to stimulate economic growth through increased consumption and production in relevant industries. Additionally, the exemption on import duties for critical minerals signifies the government’s commitment to securing a stable supply chain for essential materials, further supporting various sectors dependent on these resources. It reflects a strategic approach to fostering domestic industries and reducing dependence on external sources.
Insight: African nations’ surge in building gold reserves as a hedge against economic uncertainties highlights the importance of precious metals in safeguarding against currency devaluation and inflation. This trend underlines the role of gold as a reliable store of value, particularly in regions facing geopolitical volatility and economic challenges. By diversifying into gold reserves, these nations aim to enhance financial stability and protect their economies from external shocks and market fluctuations.
