The latest trade data for India and China show that imports remained subdued in September. We had always believed that demand in India would weaken in Q3 as a result of the new tax system but the government’s decision to reverse an order that brought the gem & jewellery sector under anti-money laundering legislation should encourage buying in the coming months. In China, we expect consumption to pick up ahead of the upcoming festive season, but wholesalers appear to have ample stocks, meaning that imports are likely to remain weak. Overall, we doubt that physical demand will provide much support to gold prices, which underpins our view that prices will edge lower over the coming months.
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