Gold news archive — the price, India's import regime and central banks

What this gold news archive covered

The gold news file is the largest in the archive, and it divides cleanly into four subjects that the desk returned to week after week. The first is the price itself, reported as a series of closes and forecasts from banks and analysts, which makes the file a useful record of how wrong the consensus was in 2012 and how late it turned in 2013. The second is India: the import duty, the 80:20 rule, the Reserve Bank's attempts to redirect household savings, and the smuggling that followed each tightening. The third is the official sector: central-bank purchases, reserve announcements, and the occasional restitution claim reaching back to the First World War. The fourth is the exchanges, where new venues in Kunming, Shanghai, Tokyo and Dubai were competing for the same order flow.

What holds the four together is that the archive was written from the physical market outward, not from a trading desk. Prices are quoted in rupees per ten grams as often as in dollars per ounce, jewellers and stockists appear as market participants rather than as colour, and duty and premium are treated as part of the price rather than as friction. That perspective is unusual in English-language trade coverage of the period, and it is the main reason this gold news archive still reads as reporting rather than as commentary.

The price, and what the forecasts said

Gold entered the period at the top of a twelve-year advance. The dispatches from late 2011 and 2012 are dominated by bank outlooks that expected the advance to continue: targets above $2,000 were routine, and the argument was consistently monetary: real rates, balance-sheet expansion, currency debasement. That argument did not survive 2013. The April break removed roughly $200 an ounce in two sessions, forecasts were cut sharply and repeatedly through the second half of the year, and by 2015 the same institutions were publishing averages near $1,100.

The archive is worth reading for the asymmetry rather than for the numbers. The upgrades in 2012 were argued at length; the downgrades in 2013 were mostly arithmetic. Very little in the file anticipates the physical-demand response that followed the fall, which is the single most reliable pattern in the whole period: every sharp price drop was met by a surge in Indian and Chinese buying, and every attempt to suppress that buying by policy produced a parallel market instead.

Where to check this

This page is current writing, so its mechanisms can be checked against the bodies that publish them. Figures inside the restored dispatches stay as filed.

• World Gold Council Gold Demand Trends, the quarterly series that splits demand into jewellery, investment, central banks and technology, which are the four categories the hubs use.

India, duty, and the parallel price

Between January 2012 and August 2013 India's gold import duty rose from 2 % to 10 % and an export-linked quota rule was added on top. The stated purpose was the current-account deficit. The measurable effects were three: the landed premium over the London price widened, the bank retail channel for coins was restricted and then reconsidered, and seizures at the international airports rose enough to become a standing story. The archive covers all three, and because it does so contemporaneously it records the official position and the market response in the same week rather than in retrospect.

The official sector

Central-bank buying was the quietest and most consequential story of the period. The official sector had been a net seller for most of the two preceding decades; from 2010 it was a net buyer, and by 2012 was on course for roughly 500 tonnes in a single year. The buyers were not the traditional holders. They were emerging-market central banks diversifying reserves away from a small set of currencies, and the archive tracks the announcements one at a time, including the ones that were later revised. Read in sequence, the central-bank entries in this gold news archive show how incremental the shift was: the buying arrived as a series of separate national announcements rather than as one coordinated move.