India, the world’s second largest importer of gold and silver, seen a huge decline of 69 percent in December as the government curbed purchases in an attempt to maintain the widening current-account deficit.
According to the Commerce Secretary S.R. Rao, import shipments of both gold and silver were valued at $1.77 billion in December opposed to the $5.68 billion during the same month last year. Taxes on purchases also increased three times last year totaling 10 percent.
The World Gold Council reports that India’s imports totaled 423 tons through the first six months, while India is aiming to curb purchases totaling 800 metric tons, down 45 tons from the previous financial year.
Precious metals have been rallying after US treasuries began their decent after poorer than expected US data last week, and both gold and silver are at pivotal points for a boost further to the upside.
Gold , currently trading at $1,251 per ounce, is pressing against minor resistance at $1,252. The 50 EMA, on the daily chart, is given the current candle support during early trading. The RSI has been able to push through a descending trend line, but it is currently at a historical inflection point where previous corresponding reading lead to a downward move. However, it it can extend through this point, gold can push higher.
If gold can push higher, the next line of resistance is between the 72 EMA and price action resistance between $1,262/70. What is interesting, is that gold’s momentum in the current wave is weakening further even though there is a bullish DMI cross taking place. This could signal a grind higher as gold traders may need a strong catalyst to push prices higher.
Silver, currently trading at $20.26, has been trading sideways for a while with price action confined to a channel. Price action is seeing support on the 50 EMA on the daily chart, and resistance will likely be found at the top of the channel, $20.43 per ounce. Silver typically tracks the inverse of the US dollar, and silver has seen strength through the recent dollar weakness. This is likely to continue given speculation that the Fed will delay tapering due to the less than expected non-farm payrolls.
If $20.43 is pushed through and supported, silver will have upside potential to $20.79 and $21.17. Although, silver could retest the 20 EMA at $19.84 for support.