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RJ Market Watch

Asia gold: Demand still lacklustre as top hubs gradually open shop



 Physical gold demand was tepid in most Asian centres this week with retail buying yet to see any significant recovery even as top hubs India and China eased some coronavirus-driven restrictions.

Dealers in China sold gold at discounts of $28-$40 an ounce versus benchmark spot prices, widening from last week’s $30 discounts, with some purchases coming only from the investment side.

“After a small gold rush that saw people buying physical bars during the 1 May labour holiday, demand has softened down since last week,” said Samson Li, a Hong Kong-based precious metals analyst at Refinitiv GFMS. Retailers, he added, did not wish to pile up stocks. “Expect retail demand to continue to be weak, despite a slow recovery in the Chinese economy.”

Global spot prices were up over 2% so far this week on rising U.S.-China tensions that fanned fears of a longer recovery from the economic hit due to the pandemic. [GOL/]

“Retail business is dead and there’s lesser customer interest in jewellery,” said Peter Fung, head of dealing at Wing Fung Precious Metals, adding some people were also trying to sell their jewellery.

In Hong Kong, gold was sold at a premium of $0.50-$1.50 per ounce. “No tourists in Hong Kong and locally, only investment buying and little bit of jewellery (purchases),” said Ronald Leung, chief dealer, Lee Cheong Gold Dealers in Hong Kong.

Trading remained negligible in India amid a nationwide lockdown that has been extended until May 17. A few stores were open but they witnessed tiny footfall due to high prices.

“We have opened half of our jewellery stores, but demand was weak. Many customers couldn’t reach the stores due to travel restrictions,” said Anoop Chemmanur, managing director of Chemmanur Jewellers in Bangalore. Indian gold futures were trading around 46,800 rupees per 10 grams on Friday, not far off a record high of 47,327 rupees hit last month. India’s gold imports plunged in April to their lowest in nearly three decades as air travel was banned.

In Singapore, gold was sold at a premium of $1.20-$1.50 an ounce, with interest still coming mostly from the investment side.

“As prices are higher now, we’ve worked with logistics partners to pick up gold sold by clients looking to take profit and also those who need funds to tide through this period,” said Brian Lan of Singapore dealer GoldSilver Central.

“Only pawn brokers are currently allowed to resume business within guidelines.”

In Japan, gold was sold at anywhere between at par with the benchmark to a $0.50 premium.


Courtesy: Reuters

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