Oil prices fell on Wednesday…
The IEA monthly oil market…
Gold has subsided that last two months — giving back much of the stellar gain the metal enjoyed at the beginning of 2016, to a current price of $1,130 per ounce.
But news this week suggests bullion may be about to get a lift. From a number of different markets across the world.
Firstly, in the world’s largest gold-buying nation, India. Where reports emerged this week that the government may be about to cut import taxes on gold.
Bloomberg cited unnamed sources Wednesday as saying that the government is looking to drop gold import duties to 6 percent. A significant reduction from the current 10 percent import tax.
The lower taxes are part of an effort to curb gold smuggling into India. A problem that has become rampant since the government stepped up import duties earlier this year.
If the measure does pass, it should help lift gold demand across India. Especially given that rumors about potential moves by the government to restrict gold ownership appear to have been overblown.
That would obviously be supportive of gold prices. And bullion could get an even bigger lift — from Islamic buyers, who got a go-ahead this week to begin buying gold and silver in a major way.
This past Monday, the Singapore Exchange unveiled its first sharia-compliant gold futures contract. Which is designed to meet all requirements for Islamic finance — allowing buyers in the Muslim world to get into this market.
Related: U.S. Natural Gas Needs Mexico
That comes after Bahrain’s Accounting and Auditing Organization for Islamic Financial Institutions released new guidelines last month on gold and silver buying for Islamic investors.
Those rules now bring the clarity needed for Muslim buyers to get into precious metals. And allow sellers like the Singapore Exchange to tailor products to this market, potentially opening up a lot of new buying.
As a final bonus item, gold miners also got some good news this week — in the emerging exploration destination of Nigeria - where mines minister Kayode Fayemi said the federal government has secured $150 million from the World Bank to support a national mining investment fund.
Nigeria has in fact been talking about a mining fund for some time. But this big commitment from the World Bank makes the plan much more concrete — potentially giving developers of gold, zinc and other metals across Nigeria a major source of project funding.
Watch for the finalizing of Nigeria’s fund, as well as rising gold buying from the Islamic world — and a potential decision on an import tax revision in India. The next few months could be very interesting for bullion.
Here’s to global gold,
By Dave Forest
More Top Reads From Oilprice.com:
Dave is Managing Geologist of the Pierce Points Daily E-Letter.