A surge in demand among Indian consumers for gold jewellery and bars after a recent cut to tariffs is helping to drive global bullion prices to a series of fresh highs.

India’s gold imports hit their highest level on record by dollar value in August at $10.06bn, according to government data released Tuesday. That implies roughly 131 tonnes of bullion imports, the sixth-highest total on record by volume, according to a preliminary estimate from consultancy Metals Focus. 

The high gold price — which is up by one-quarter since the start of the year — has traditionally deterred price-sensitive Asian buyers, with Indians reducing demand for gold jewellery in response.

But the Indian government cut import duties on gold by 9 percentage points at the end of July, triggering a renewed surge in demand in the world’s second-largest buyer of gold.

“The impact of the duty cut was unprecedented, it was incredible,” said Philip Newman, managing director of Metals Focus in London. “It really brought consumers in.”

The tariff cut has been a boon for Indian jewellery stores such as MK Jewels in the upmarket Mumbai suburb of Bandra West, where director Ram Raimalani said “demand has been fantastic”.

Customers were packed into the store browsing for necklaces and bangles on a recent afternoon, and Raimalani is expecting an annual sales boost of as much as 40 per cent during the multi-month festival and wedding season that runs from September to February. 

Raimalani praised India’s government and “Modi ji”, an honorific for Prime Minister Narendra Modi, for reducing gold duties.

Expectations of rapid interest rate cuts by the US Federal Reserve have been the main driver of gold’s huge rally this year, according to analysts. Lower borrowing costs increase the attraction of assets with no yield, such as bullion, and are also likely to weigh on the dollar, in which gold is denominated.

The Fed cut rates by half a per cent on Wednesday, pushing gold to yet another record high, just below $2,600. 

But strong demand for gold jewellery and bars, as well as buying by central banks, have also helped buoy prices. 

India accounted for about a third of gold jewellery demand last year, and has become the world’s second-largest bar and coin market, according to data from the World Gold Council, an industry body.

However, that demand has meant that domestic gold prices in India are quickly catching up to the level they were at before the tariff duty cut, according to Harshal Barot, senior research consultant at Metals Focus. 

“That entire benefit [of the tariff cut] has kind of vanished,” said Barot. “Now that prices are going up again, we will have to see if consumers still buy as usual.”

Jewellery buying had been flagging before the cut in import duty, with demand in India in the first half of 2024 at its lowest level since 2020, according to the World Gold Council.

India’s central bank has also been on a gold buying spree, adding 42 tonnes of gold to its reserves during the first seven months of the year — more than double its purchases for the whole of 2023. 

A person familiar with the Reserve Bank of India’s thinking called the gold purchases a “routine” part of its foreign exchange reserve and currency stability management.

In China, the world’s biggest physical buyer of gold, high prices have meant fewer jewellery sales, but more sales of gold bars and coins, which surged 62 per cent in the second quarter compared with a year earlier.

“We observed strong positive correlation between gold investment demand and the gold price,” wrote the World Gold Council, referring to China.

All of this has helped support the physical market and mitigate the impact that high prices can have in eroding demand. 

“It acts as a stable foundation for demand,” said Paul Wong, a market strategist at Sprott Asset Management. “In parts of Asia, gold is readily convertible into currency,” making it popular for savings, he said.

Western investor demand has also been a big factor in bullion’s rally, with a net $7.6bn flowing into gold-backed exchange traded funds over the past four months. 

After hitting a fresh high on Wednesday, analysts warn there could be a correction in the gold price.

“When you have this scale of anticipation [of rate cuts], for this long, there is room for disappointment,” said Adrian Ash, London-based director of research at BullionVault, an online gold marketplace. “I think there is scope for a pullback in precious alongside other assets.”

Whether or not gold pulls back from its record highs, Indian jewellery demand looks set to remain strong through the coming wedding season, according to MK Jewels’ Raimalani.

Soaring prices of bullion have been no deterrent to his customers, he added. “Indians are the happiest when prices go high because they already own so much gold. It’s like an investment.”

Tidal action on the underside of the Thwaites Glacier in the Antarctic will “inexorably” accelerate melting this century, according to new research by British and American scientists. The researchers warn the faster melting could destabilize the entire West Antarctic ice sheet, leading to its eventual collapse.

The massive glacier—which is roughly the size of Florida—is of particular interest to scientists because of the rapid speed at which it is changing and the impact its loss would have on sea levels (the reason for its “Doomsday” moniker). It also acts as an anchor holding back the West Antarctic ice sheet.

More than 2 kilometers (1.2 miles) thick in places, Thwaites has been likened to a cork in a bottle. Were it to collapse, sea levels would rise by 65 centimeters (26 inches). That’s already a significant amount, given oceans are currently rising 4.6 millimeters a year. But if it led to the eventual loss of the entire ice sheet, sea levels would rise 3.3 meters.

While some computer models suggest reductions in greenhouse gas emissions under the 2015 Paris Agreement may mitigate the glacier’s retreat, the outlook for the glacier remains “grim,” according to a report by the International Thwaites Glacier Collaboration (ITGC), a project that includes researchers from the British Antarctic Survey, the U.S. National Science Foundation and the U.K.’s Natural Environment Research Council.

Thwaites has been retreating for more than 80 years but that process has accelerated in the past 30, Rob Larter, a marine geophysicist who contributed to the research, said in a news release. “Our findings indicate it is set to retreat further and faster.” Other dynamics that aren’t currently incorporated into large-scale models could speed up its demise, the new research shows. 

Using a torpedo-shaped robot, scientists determined that the underside of Thwaites is insulated by a thin layer of cold water. However, in areas where the parts of the glacier lift off the seabed and the ice begins to float, tidal action is pumping warmer sea water, at high pressure, as far as 10 kilometers under the ice. The process is disrupting that insulating layer and will likely significantly speed up how fast the grounding zone—the area where the glacier sits on the seabed—retreats.

A similar process has been observed on glaciers in Greenland.

The group also flagged a worst-case scenario in which 100-meter-or-higher ice cliffs at the front of Thwaites are formed and then rapidly calve off icebergs, causing runaway glacial retreat that could raise sea levels by tens of centimeters in this century. However, the researchers said it’s too early to know if such scenarios are likely.

A key unanswered question is whether the loss of Thwaites Glacier is already irreversible. Heavy snowfalls, for example, regularly occur in the Antarctic and help replenish ice loss, Michelle Maclennan, a climate scientist with the University of Colorado at Boulder, explained during a news briefing. “The problem though is that we have this imbalance: There is more ice loss occurring than snowfall can compensate for,” she said. 

Increased moisture in the planet’s atmosphere, caused by global warming evaporating ocean waters, could result in more Antarctic snow—at least for a while. At a certain point, though, that’s expected to switch over to rain and surface melting on the ice, creating a situation where the glacier is melting from above and below. How fast that happens depends in part on nations’ progress to slow climate change.

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Britain’s foreign secretary David Lammy is pushing for an emergency top-up to development spending as ballooning costs of supporting asylum seekers threaten to drain overseas aid to its lowest level since 2007.

The UK government spent £4.3bn hosting asylum seekers and refugees in Britain in the last financial year, more than a quarter of its £15.4bn overseas aid budget, according to official data. This more than consumed the £2.5bn increases in the aid budget scheduled between 2022 and 2024 by former Conservative chancellor Jeremy Hunt.

People familiar with Lammy’s thinking say he fears that if Rachel Reeves, the chancellor, resists calls to at least match Hunt’s offer, the aid budget will be further eviscerated, undermining the government’s ambitions on the global stage.

Currently, the housing of asylum seekers in hotels is controlled by the Home Office but largely paid for out of the aid budget, a set-up introduced in 2010 when spending on the programme was relatively modest.

In the longer term, development agencies and some Foreign Office officials want the costs capped or paid for by the Home Office itself.

However, such a move would be politically fraught, the people said, as it would require billions of pounds of extra funding for the Home Office at a time the government is preparing widespread cuts across departments.

Sir Keir Starmer, the prime minister, is due to attend a string of upcoming international events, starting with the UN general assembly this month, then a Commonwealth summit in Samoa, a G20 meeting in Brazil, and COP-29 climate talks in Azerbaijan later this autumn.

International partners will be looking at these meetings for signs that the change of government in the UK marks a change in direction on development.

Britain’s leading role was eroded by Rishi Sunak after he cut the previously ringfenced spending from 0.7 per cent of gross national income to 0.5 per cent when he was chancellor in 2020.

“When he turns up at the UN next week and the G20 and COP a few weeks later, the PM has a unique opportunity to reintroduce the UK under Labour as a trustworthy partner that sees the opportunity of rebooting and reinvesting in a reformed fairer international financial system,” said Jamie Drummond, co-founder of aid advocacy group One.

“But to be that trusted partner you need to be an intentional investor — not an accidental cutter.”

Speaking on Tuesday in a speech outlining UK ambitions to regain a leading role in the global response to climate change, Lammy said the government wanted to get back to spending 0.7 per cent of GNI on overseas aid but that it could not be done overnight.   

“Part of the reason the funding has not been there is because climate has driven a migration crisis,” he said. “We have ended up in this place where we made a choice to spend development aid on housing people across the country and having a huge accommodation and hotel bill as a consequence,” he said.

Under OECD rules, some money spent in-country on support for refugees and asylum seekers can be classified as aid because it constitutes a form of humanitarian assistance.

But the amount the UK has been spending on refugees from its aid budget has shot up from an average of £20mn a year between 2009-2013 to £4.3bn last year, far more than any other OECD donor country, according to Bond, the network of NGOs working in international development.

Spending per refugee from the aid budget has also risen from an average of £1,000 a year in 2009-2013 to around £21,500 in 2021, largely as a result of the use of hotels to accommodate asylum seekers.

The Independent Commission for Aid Impact watchdog argues that the Home Office has had little incentive to manage the funds carefully because they come from a different department’s budget.

In her July 29 speech outlining the dire fiscal straits that Labour inherited from the previous Conservative government, Reeves projected the cost of the asylum system would rise to £6.4bn this year.

Labour was hoping to cut this by at least £800mn, she said, by ending plans to deport migrants to Rwanda. A Home Office official said the government was also ensuring that asylum claims were dealt with faster and those ineligible deported quickly.

But the Foreign Office projects that on current trends, overseas aid as a proportion of UK income (when asylum costs are factored in) will drop to 0.35 per cent of national income by 2028.

Without emergency funding to plug the immediate cost of housing tens of thousands of migrants in hotels, that will happen as soon as this year, according to Bond, bringing overseas aid levels to their lowest as a proportion of national income, since 2007.

The Foreign, Commonwealth and Development Office said: “The UK’s future [official development assistance] budget will be announced at the Budget. We would not comment on speculation.”

The Economist has deployed AI-translated content on its budget-friendly “snack-sized” app Espresso after deciding the technology had reached the “good enough” mark.

Ludwig Siegele, senior editor for AI initiatives at The Economist, told Press Gazette that AI translation will never be a “solved problem”, especially in journalism because it is difficult to translate well due to its cultural specificities.

However he said it has reached the point where it is good enough to have introduced AI-powered, in-app translations in French, German, Mandarin and Spanish on The Economist’s “bite-sized”, cut-price app Espresso (which has just over 20,000 subscribers).

Espresso has also just been made free to high school and university students aged 16 and older globally as part of a project by The Economist to make its journalism more accessible to audiences around the world.

Siegele said that amid “lots of hype” about AI, the questions to ask are: “What is it good for? Does it work? And does it work with what we’re trying to do?”