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LONDON — Gold reached record-breaking levels in September, buoyed by a bumper US interest rate cut, fears of rising geopolitical conflict, and an import tax cut in India that has galvanised local demand.

India, the world's second largest consumer of gold jewellery, cut the import tax on gold in July to six per cent from 15 per cent, sparking a significant increase in appetite for gold jewellery, bars and coins.

The legislation has led to "soaring" local imports of the metal which has given "fresh impetus" to its upwards price, explained Han Tan, chief market analyst at Exinity in an interview with AFP.

Gold has been smashing records throughout September, reaching a new high of $2,685.58 an ounce on Thursday, up around 30 per cent from the start of the year.

The sky-high prices have also been buoyed by gold's status as a safe haven investment during times of economic and political uncertainty.

Investors have increasingly turned to the metal as conflicts in Ukraine and the Middle East unsettled markets for raw materials.

It's also been lifted by the Federal Reserve's jumbo 50 basis point interest rate cut in September.

With falling returns on dollar deposits, major central banks have shifted reserves from the greenback to gold, in a process of "de-dollarization".

The same dynamic has also benefited silver, which reached $32.71 per ounce on Thursday — its highest price since December 2012 — after soaring by around 35 per cent in the first nine months of 2024.

Festival Season

India's resurgence in demand has revived excitement for the metal, after the market for gold jewellery had previously cooled as buyers were put off by high-prices.

Purchases of jewellery, which represent three-quarters of the Indian gold market, fell 17 per cent in the second quarter of 2024 compared to that of the previous year.

To stimulate demand, India's government cut the customs levy for gold.

Gold imports into India more than tripled in August from the previous month, doubling from a year earlier to $10.1 billion, according to calculations by the World Gold Council (WGC).

The reduction "boosted demand for gold in India as expected, as it makes the metal cheaper for buyers there", Frank Watson, market analyst at Kinesis Money told AFP.

The boost took full effect at the start of September as India's festival season began, which includes the Hindu festival of Diwali — synonymous with purchases of gold bars, necklaces, rings and bracelets.

"After recent import duty cuts, retailers are restocking ahead of the festive and wedding season," noted analysts at ANZ bank.

"Rising per capita income, a young population and urbanisation are supporting jewellery buying," ANZ analysts added in a second report shared with AFP.

Demand has also been reignited in India's rural areas, driven by favourable monsoons which should "improve crop yields and help support the economy, boosting demand for gold as a portable store of value," Watson told AFP.

Meanwhile, the world's biggest gold buyer, China, continues to face a weak gold jewellery market in the context of the country's ailing economy.

However, the country's authorities announced measures this week aimed at stimulating demand.

BERLIN — Germany's economy is expected to shrink slightly in 2024, leading economic institutes said on recently, as the traditional manufacturing powerhouse continues to stagnate.

Output in Europe's largest economy will decline by 0.1 per cent this year, five think tanks said in a joint statement, after it shrank by 0.3 per cent in 2023.

The new figure was a small but significant downgrade on the institutes' previous estimate of 0.1 per cent growth for 2024, made earlier this year.

"The German economy has been stagnating for more than two years," the institutes — DIW, Ifo, IfW Kiel, IWH and RWI — said in the joint statement.

"A slow recovery is likely to set in next year, but economic growth will not return to its pre-coronavirus trend for the foreseeable future," they said.

The institutes forecast growth to reach 0.8 per cent in 2025, a downward revision on their previous estimate of 1.4 per cent.

For 2026, they predicted the German economy to grow by 1.3 per cent.

The general downturn was driven by "structural change" weighing on the economy, DIW's head of forecasting Geraldine Dany-Knedlik said in the statement.

Decarbonisation and demographic change as well as stronger competition from key market China were "dampening the long-term growth prospects", Dany-Knedlik said.

The effects were being felt particularly keenly in Germany's key manufacturing sector, the institutes said.

Manufacturing industries were hard hit by the increase in energy costs, following the Russian invasion of Ukraine in 2022, and a sharp rise in inflation.

The rise of competitors in China making high-quality goods for export is "displacing German exports on world markets", the institutes said.

A tentative recovery next year would be "driven by a revival in private consumption" on the back of rising incomes, they said.

"The upturn in key sales markets, such as neighbouring European countries, will support German foreign trade," they said.

LONDON — The European Bank for Reconstruction and Development said Thursday that it expected Lebanon's economy to decline further in 2024 because of geopolitical turmoil.

Lebanon's economy will contract by one per cent in 2024, the EBRD predicted, heavily revising down its estimation made in May that the struggling economy would grow slightly.

Israel's war in Gaza has already impacted neighbouring countries economic growth and fighting is now heighteneing in Lebanon.

"Any escalation will certainly weigh down on growth," Beata Javorcik, the EBRD's chief economist told AFP.

The country, already facing difficult economic conditions and sky-high inflation, has lost more than 40 per cent of its GDP since 2018, the bank said in a report.

It added that "political impasse and stagnant progress on critical reforms continued to hold back recovery."

Meanwhile in the midst of Russia's war on Ukraine, the Russian economy grew 4.7 per cent in the first half of 2024, as the price of the country's oil exports offset the impact of Western sanctions.

"The price of Russia's oil exports is estimated to have increased by more than 10 per cent year on year and trade with non-sanctioning economies has been strong", the bank said, pointing to China as a key driver of the country's economic growth.

The EBRD expects the 2024 full year growth to be 3.6 per cent, revising upwards it's estimation made in May by 1.1 per cent.

However, Javorcik told AFP that "next year there will be a significant slowdown" in the country's growth as there are signs that the Russian economy is "overheating".

The EBRD was founded in 1991 to help former Soviet bloc nations embrace free-market economies, but has since extended its reach to the Middle East and North Africa.

The economies of the countries in which the EBRD operates are expected to grow by 2.8 per cent this year, slightly less than the bank previously estimated.

It attributes this to "a weaker outlook for advanced Europe, stagnating mining output in Kazakhstan and Uzbekistan, the ongoing conflict in Gaza and Lebanon and severe droughts in Morocco and Tunisia."

PARIS — The co-founder of one of the world's most popular cryptocurrencies called for tighter regulation of the sector to guard against the fraud and wild swings that have dogged it, in an interview with AFP.

Jeremy Allaire of Circle recounted the US firm's decision to offer a stabilised cryptocurrency — and insisted crypto operators owed it to society to submit to safeguards just as other emerging sectors such as AI must.

"We have social objectives that we have to match against the technology," Allaire said during a visit this week to Circle's European headquarters in Paris.

Circle offers a USDC "stablecoin", pegged to the dollar, as well as a euro-pegged variant, EURC.

Currently, $35.5 billion worth of USDC are in circulation.

As with other cryptocurrencies, transactions are recorded on a decentralised ledger, the blockchain, and not by a bank as is the case with traditional currencies.

However, whereas the dollar value of cryptocurrencies such as bitcoin tends to fluctuate, often wildly, the creators of stablecoins actively target a stable value.

In a world propelled by technological development, Allaire said, safeguards are vital for such activities.

"If I'm writing software to control a ballistic missile system, that should be regulated activity," said Allaire.

"If I'm writing a large language model and deploying that, and it has the potential to do very problematic things in society, there need to be rules that need to be assessed. Crypto is the same thing."

Crypto fraud, ransomware 

Cryptocurrencies have made headlines since their creation, from their extreme volatility to the collapse of several industry giants, foremost among them the FTX exchange platform.

The best-known cyptocurrency, bitcoin, remains the currency of choice for paying on the dark web without leaving any trace.

It is used for extorting funds via ransomware attacks, which block access to victims' computer systems and demand a ransom payment.

According to a recent report by Chainanalysis, the first half of 2024 was marked by a decrease in illicit activities. However, over that period, $460 million was paid out for ransomware, a rise of 2 per cent on a year earlier.

Crypto exhanges operate through open-source software, Allaire noted.

"That helps with transparency, visibility, security, other things."

But some have been "using the technology to do things outside of any kind of supervision", he conceded.

"You've seen fraud, abuse. You've seen people running off with money."

When cryptocurrency emerged, "unregulated intermediaries" sprang up in the sector, he said.

"Of course, the risks they take... in many cases, have led to significant losses," Allaire said.

"But that's not an argument against the technology. That's an argument against humans. And it's an argument for better supervision."

EU, US crypto regulations 

Regulators across the globe have taken note.

Last year the European Parliament adopted an EU-wide framework for crypto asset markets, "MiCA" — Markets in Crypto-Assets — requiring mandatory approval for digital-asset service providers.

In July, Circle announced it was the first "stablecoin" issuer to comply with this new regulation.

Stablecoins are used to facilitate intra-crypto exchanges by investors without having to go through a bank.

But they also give users access to a product pegged to the dollar without having a bank account in the United States, and allow cross-border payments or money transfers.

In the United States too, greater regulation is on the agenda.

US presidential candidate Kamala Harris was quoted as telling Bloomberg last week: "We will encourage innovative technologies like AI and digital assets, while protecting our consumers and investors."

In May the US House of Representatives passed a legal framework designed to regulate the crypto market — the Financial Innovation and Technology for the 21st Century Act.

Circle is meanwhile preparing to move its headquarters from Boston to New York City — "at the very top of the World Trade Centre... the very heart of the dollar international system", says Allaire.

"That's in part symbolic. It's also who we are, what we're doing. We're building, hopefully, the world's leading digital dollar and upgrading to this new internet financial system."

BEIJING — China unveiled some of its boldest measures in years on Tuesday aimed at boosting its struggling economy as leaders grapple with a prolonged property sector debt crisis, continued deflationary pressure and high youth unemployment.

The world's second-largest economy has yet to achieve a highly anticipated post-pandemic recovery and the government has set a goal of 5 per cent growth in 2024 — an objective analysts say is optimistic given the headwinds it is facing.

On Tuesday, Central Bank Chief Pan Gongsheng told a news conference in Beijing that it would cut a slew of rates in a bid to boost growth, pledging to "promote the expansion of consumption and investment".

The moves represent "the most significant... stimulus package since the early days of the pandemic", said Julian Evans-Pritchard, head of China economics at Capital Economics.

But "it may not be enough", he warned, adding a full economic recovery would "require more substantial fiscal support than the modest pick-up in government spending that's currently in the pipeline".

Among the moves unveiled Tuesday was a cut to the reserve requirement ratio, which dictates the amount of cash banks must hold in reserve.

The move will inject around a trillion yuan ($141.7 billion) in "long-term liquidity" into the financial market, Pan said.

Beijing would also "lower the interest rates of existing mortgage loans".

And it will "guide commercial banks to lower the interest rates of existing mortgage loans to the vicinity of the interest rates of newly issued loans".

The move would benefit 150 million people across the country, Pan said, and reduce "the average annual household interest bill by about 150 billion yuan".

Beijing will also create a "swap programme" allowing firms to acquire liquidity from the central bank, Pan said, a move he said would "significantly enhance" their ability to access funds to buy stocks.

"The initial scale of the swap programme will be set at 500 billion yuan, with possible expansions in the future," Pan said.

More cash please 

Shares in Hong Kong surged more than 3 per cent and in Shanghai more than two percent after China unveiled the measures.

But Heron Lim at Moody's Analytics said the move was expected given gloomy economic data in recent months suggesting Beijing could miss its 2024 growth target.

"But this is hardly a bazooka stimulus," he told AFP.

"Far more monetary easing and a stronger government stimulus is also desirable to finish bailing out the real estate market and inject more confidence into the economy," he said.

At a minimum, he added, "broader direct household support in helping them consume more goods will be useful, which is currently just too narrowly designed for industrial goods".

Another analyst said the "measures are a step in the right direction".

"We continue to believe that there is still room for further easing in the months ahead," said Lynn Song, chief economist for Greater China at ING.

Property and construction have long accounted for more than a quarter of China's gross domestic product, but the sector has been under unprecedented strain since 2020, when authorities tightened developers' access to credit in a bid to reduce mounting debt.

Since then, major companies including China Evergrande and Country Garden have teetered, while falling prices have dissuaded consumers from investing in property.

Beijing has unveiled a number of measures aimed at boosting the sector, including cutting the minimum down payment rate for first-time homebuyers and suggesting the government could buy up commercial real estate.

But those failed to boost confidence and housing prices have continued to slide.

Adding further strain, local authorities in China face a ballooning debt burden of $5.6 trillion, according to the central government, raising worries about wider economic stability.

Speaking alongside the central bank chief Tuesday, Li Yunze, director of the National Administration of Financial Regulation, said Beijing would "actively cooperate in resolving real estate and local government debt risks".

"China's financial industry, especially large financial institutions, is operating stably and risks are controllable," he insisted.

"We will firmly maintain the bottom line of preventing systemic financial risks," he added.

GENEVA — The World Trade Organisation (WTO) agreed Monday to establish an expert panel to examine US subsidies for electric vehicles after Beijing accused Washington of unfair competition.

The United States slammed China's complaint, insisting the country was seeking "to distract from its own non-market policies and practices that undermine a fair, competitive and mutually beneficial trading system".

The world's second-largest economy initially brought the case to the WTO in March, charging that the US Inflation Reduction Act (IRA) "formulates discriminatory subsidy policies for new energy vehicles", referencing a classification that includes electric cars and hybrids.

In 2022, the United States announced a massive aid programme to support companies in the energy transition sector and electric cars manufactured on American soil.

The United States has insisted that the act was a tool to address the climate crisis and "invest in US economic competitiveness".

It was also meant to counter Beijing's subsidies for electric vehicles and the wider green industry within China, which has poured vast state funds into domestic firms as well as research and development.

Washington blocked an initial request for a WTO panel in the case in July, but a second request was granted Monday during a meeting of the organisation's Dispute Settlement Board, according to a Geneva-based trade official.

Under WTO regulations, parties in a dispute can block a first request for an arbitration panel, but if the parties make a second request, it is all but guaranteed to go through.

"If China chooses to go forward with a panel proceeding, the United States will vigorously defend the Inflation Reduction Act clean energy tax credits as fully consistent with WTO rules and necessary to address our global climate crisis," the representative said, according to a transcript provided by the US mission.

"Existing WTO rules cannot be understood to prevent WTO Members from taking action to address the most urgent global issues of our time."

The WTO dispute comes at a time when Beijing and Washington are locking horns over a series of trade issues, including customs duties, cutting-edge technologies and a possible ban on social media site TikTok.

The United States had already announced in May that it was quadrupling customs duties on imported Chinese electric vehicles, with economic competition with Beijing at the heart of the US presidential campaign.