Gold prices fell sharply by 7.75% in the month of April to close at $1472.1 after touching a two year low of $1356.5 on April 18. The metal's appeal as a haven from risk was hurt by speculation the U.S. economic recovery is gaining traction and a retreat in concerns over Cyprus. A European Commission assessment of what Cyprus needs to do as part of its European Union/International Monetary Fund bailout showed it was set to sell gold reserves to raise around 400 million euro’s. While Cyprus' gold sale in itself is small, heavily indebted euro zone nations such as Italy and Portugal could also find themselves under increasing pressure to put their bullion reserves to work.
Wary investors continued to cut exposure to gold due to this reason. However, the prices managed to recover from the lows due to huge demand from consumers across markets internationally and reports of non-European central banks adding gold to their reserves. Crude prices corrected by around 3.9% in April to close at $93.46 per barrel. The prices had fallen to a low of $86.68 on April 17 as the outlook for global oil demand dimmed. The Energy Information Administration reported that crude -oil stocks had climbed to their highest level since July 1990. Further, the IMF lowered its global economic growth forecasts for 2013 on April 16.
India currently imports three-fourths of its crude oil requirement. In fact, petroleum oil and lubricants account for a little more than a third of India's import bill, according to government figures. Gold is the second-largest import item for India. The country is the world’s largest bullion buyer. Weakening crude oil & gold prices tend to have a positive impact on the Indian economy. Lower crude oil prices would help reduce oil marketing companies' under-recoveries and the government's oil subsidy burden, which can bring down its fiscal deficit. Falling gold prices would also reduce the import bill of India and help to curb the rising current account deficit.
Resource :- http://goarticles.com/article/Recent-Sharp-Correction-in-Oil-and-Gold/7600997/
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