India should import up to 1,000 tons of gold in the current fiscal year

The publication of various economic figures in the US, which were anything but uniform, sparked a rollercoaster ride for gold prices yesterday. Disappointing US labour market data, the number of jobs created as reported by the ADP fell short of expectations in July, initially drove the gold price up to a good $1,090 per troy ounce. 

It was unable to defend these gains, however, because the ISM index for the non-manufacturing sector turned out to be considerably better than anticipated. It climbed to 60.3, its highest level in nearly ten years - the employment component suggesting a robust job creation rate in the service sector. 

As a result, gold dipped to just shy of $1,085 again, and is still trading at roughly this level this morning. Market participants are now likely to be focusing their attention on tomorrow's publication of the official US labour market statistics. Above all, the data are relevant in terms of indicating when the US Federal Reserve will raise interest rates. 

"Gold prices were also pressured yesterday by further outflows from the gold ETFs - holdings were reduced by 4.6 tons. Support could come in the next few months in the shape of Indian gold demand, the largest Indian gold refiner expects India to import between 900 and 1,000 tons of gold in the current fiscal year 2015/16", says Commerzbank. 

This is likely to be the result of higher demand due to the low prices, particularly during the festival season in the fourth quarter. India is reported to have imported 70-75 tons of gold in July, while August imports even look set to exceed this level.