India increases gold import tax and widens ban on gold consignment imports. Last week India increased its gold import duty to 8% from 6%, quadrupling the tax since January. The levy on platinum imports was also increased to 8% from 6%. India also widened the ban on consignment-based gold imports to cover state-run trading companies and others authorized to directly import gold. Indian consumers, who have helped prop-up gold demand since prices fell by over 15% in April, are an important source of support for the metal as ETF investors continue to sell.
US car sales boost demand for palladium. US car sales rose to 15.2m in May (up 9% from a year ago), beating analyst expectations. Palladium, which is used in the manufacture of gasoline autocatalysts, gained on the numbers.
Lonmin mine shootings raise supply concerns. Disputes between rival unions led to the shooting and death of a union member near Lonmin’s platinum mines. With animosity rising, there are fears that mine production will be halted for the safety of mine workers. The rivalry between the unions adds an extra layer of tension to the mid-year wage negotiations that are about to take place. Last year, platinum and palladium production was severely disrupted after 44 miners were shot dead during what has locally become known as the ‘strike season’. Palladium prices rose strongly most of last week, although prices edged down after the release of the US payrolls data.
Key events to watch this week. With a relatively light data week, all eyes will be on the Bank of Japan for any further guidance on policy. After Q1 GDP growth was revised to 4.1% annualized (from 3.5% initially), there is reason for the BoJ to remain confident in its current policy experiment. US and Euro area industrial production data will also help confirm if the weakness in PMI/ISM data has been borne in actual real activity.