"There is very little that has changed in the gold landscape since last month; inflation is a non-issue and looks even more remote now that energy prices are beating a hasty retreat"
- Edward Meir, INTL FCStone analyst
Gold plunged the most in three weeks after Swiss voters overwhelmingly rejected a referendum forcing the Swiss National Bank to hold 20% of its reserves in gold and preventing from ever selling any, as well as requiring to physically repatriate all Swiss gold held abroad. Bullion for immediate delivery dropped 2.1% to $1,142.88 an ounce, reaching the lowest level since November 7, when it fetched four-year low of $1,132.16. Gold has lost 17% since reaching the peak in March, while investor holdings of exchange-traded products are near a five-year low.
Meanwhile, in India, the world's second biggest gold buyer, where the wedding season is looming, the Reserve Bank of India unexpectedly eased rules forcing importers to sell 20% of shipments to jewellers for re-export. The decision to remove restrictions surprised markets that, on the contrary, had expected tighter rules being introduced. The end of gold controls, implemented in July last year, will return domestic demand to normal levels of around 800-900 metric tons annually, according to the Indian Bullion and Jewellers Association. 5 million weddings every year boost demand for gold in India, with average purchases for a wedding being at around 200 grams. Imports by India, which make up 25% of global demand last year, rose to 150 tons in October, the highest level in the year starter in April 1.
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