Colombia to Bangkok the last two weeks. And now back with perhaps some of the best news this year for the gold sector.
That comes from critical consuming nation India. Where officials made one of the most surprising moves yet in the ongoing saga over gold imports.
The Indian government announced this week that it is easing one of the major restrictions on gold imports: the so-called “20:80 rule”.
Under that scheme, importers of bullion have been required to re-export 20% of the supply they bring into the country. Making it more difficult for sellers to provide gold for sale.
The restriction had been eased earlier this year for some “preferred” gold sellers. But rumours had been circulating as recently as a week ago that the government was looking at reimposing the rule across the board–in an attempt to control gold imports, and reduce the nation’s current account deficit.
The announcement of a complete lifting of the rule thus comes as a major surprise.
Little reason was given for the about-face in policy direction. Officials from India’s finance ministry simply noted that the 20:80 rule had been put in place to “deal with the current-account deficit problem, which is now under control.”
It thus appears that the government has either had a change of heart over its fiscal situation. Or perhaps bowed to pressure from the strong gold-sellers lobby in the country.
Whatever the case, the news was well-received in gold markets globally. With the bullion price rising nearly $70 per ounce on Monday.
Any opening for greater gold imports into India could be a key factor in underpinning prices. Look for confirmation in trading over the coming weeks. If the metal holds above $1,200, this could also become a significant rallying point for gold stocks.