A Market Bombshell? India Faces Potential Gold Import Ban

Nov 22, 2016
Guest(s): Peter Hug Director, Global Trading, Kitco Metals
Gold has been unable to hold on to its gains Tuesday; the metal has fallen more than $100 an ounce from its post-election peak as U.S. Treasury yields posted their biggest rise in more than five years. Some analysts would argue that initially, the news of President-elect Trump's victory brought about a flight to safe-haven assets, such as gold, but the trend has since reversed as the dollar and bond yields surged on expectations of higher U.S. spending and interest rates. 'We caution that the proposals uttered by President-elect Donald Trump are merely that and until a clear understanding of how these will be paid for is advanced, the debt explosion that will occur will be massive. With higher rates, the cost of servicing this debt will rise dramatically," said Peter Hug, global trading director for Kitco Metals. But could another more massive scenario be unfolding and could it be more than the Trump effect that has been weighing on gold? India is facing a potential ban on gold imports, which could cause a potential, one-day $200 drop in gold prices, Peter Hug comments. Some analysts are saying that if it unfolds, it could be the biggest bombshell to the industry since 1971, when President Nixon took the dollar off the gold standard. December Comex gold futures settled the trading session slightly higher at $1,211.20 an ounce, up 0.12% on the day.