Gold has performed well rising from $1,243/oz at the start of the month to US$1,318/oz currently

Gold has performed well rising from $1,243/oz at the start of the month to US$1,318/oz currently. Factors driving gold include unrest in the Ukraine and Iran plus concerns over inflation longer term. In the short term upside exists from potential changes to the 80/20 rule in India where a restricted number of importers were allowed to import gold on the condition that 20% would be re-exported as finished jewellery. The rule was implemented in August 2013 and have caused imports to slump (down 45% in Q1 2014 to 45t). Additionally the government imposed a 10% import duty on gold (up from 4%). Market commentary indicates potential exists for the 80/20 rule to be relaxed and import duties reduced. Changes of this nature may see gold imports surge into India putting further upward pressure on gold price.