View Count: 160 |  Publish Date: November 25, 2013
Iran Gold Sanctions Easing Seen Having Little Impact on Prices
By Nicholas Larkin & Indira A.R. Lakshmanan - 2013-11-24T16:47:32Z
The easing of sanctions on tradinggold with Iran probably will have little impact on prices,according to Standard Bank Group Ltd. and Societe Generale SA.
“Gold overall is dominated by much bigger forces rightnow,” Walter de Wet, an analyst at Standard Bank inJohannesburg, said before Iran and world powers announced theirwider nuclear agreement today. Prices plunged 26 percent thisyear, headed for the biggest annual drop in three decades, assome investors lost faith in the metal as a store of value.
While Iran doesn’t disclose gold reserves, its demand forthe metal used in jewelry and other fabrication last year was36.9 metric tons, or 1.4 percent of the global total, accordingto data from Thomson Reuters GFMS. The Persian Gulf nationprobably expanded holdings in 2012 and early this year by takingmetal as payment for energy exports, Roubini Global EconomicsLLC said in a report in May.
The agreement in Geneva was the first since Iran’s nuclearprogram came under scrutiny in 2003. The Persian Gulf nationwill get about $7 billion in relief from economic sanctions oversix months, including the suspension of “certain sanctions ongold and precious metals,” the U.S. government said. Iran willbe barred from accepting precious metals as payment for oil orany other sanctioned transaction, according to diplomats whoasked not to be identified because of diplomatic protocol. Nuclear Program
Sanctions also are being suspended on Iran’s automotiveindustry and petrochemical exports, and the country will beallowed access to civilian aircraft parts as well as repatriate$4.2 billion in frozen assets. The two sides now aim to concludea comprehensive accord within six months.
Iran in return must improve cooperation with United Nationsmonitors, commit to eliminate its stockpile of uranium enrichedto 20 percent levels, and halt advanced centrifuge installation,the White House said in a statement. Iran also won’t commissionits Arak heavy water reactor.
Gold for immediate delivery closed little changed at$1,243.63 an ounce in London on Nov. 22, heading for the firstannual decline since 2000 and the biggest in three decades.Prices are 35 percent below the record $1,921.15 set inSeptember 2011.
Sanctions imposed on Iran include limits on its financialtransactions and crude exports, the country’s main source ofrevenue. Oil production dropped by about 1 million barrels a dayto 2.6 million barrels since the start of 2012, according todata compiled by Bloomberg. Bullion Imports
As sanctions limited Iran’s ability to receive payments,the country expanded its use of gold. Imports of bullion fromneighboring Turkey, a buyer of Iranian natural gas, jumped to126 tons last year from 1 ton in 2011, according to data fromthe International Trade Centre, an agency of the United Nationsand World Trade Organization.
Iran last reported its gold reserves to the InternationalMonetary Fund in March 1996, when it held about 168.6 tons, theWashington-based lender’s website shows. That would place itoutside the 20 largest holders now.
“For Iran to buy gold, they need to have income, whichnormally comes from oil revenues, and at the moment they’re indire straits,” Andrey Kryuchenkov, a commodity strategist inLondon at VTB Capital, said Nov. 19. “I don’t think it willsignificantly affect the market.”
The IMF estimates that Iran’s economy will contract 1.5percent this year after shrinking 1.9 percent in 2012, and willexpand 1.3 percent in 2014.
“I don’t think that because there’s been effectivesanctions on gold trading that Iranian individuals, as well asmore official people, haven’t been able to invest bits here andthere,” Robin Bhar, an analyst at Societe Generale SA inLondon, said Nov. 19. By lifting sanctions, “you’re not goingto see a significant investment or divestment,” he said.
Bloomberg competes with Thomson Reuters Corp. in sellingfinancial and legal information and trading systems.
To contact the reporters on this story:Nicholas Larkin in London at;Indira A.R. Lakshmanan in Washington at
To contact the editor responsible for this story:Claudia Carpenter at

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