Asia gold demand picks up briefly; India awaits festival demand
Tuesday, 8 October 2013 00:21
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REUTERS: Asian demand for physical gold picked up briefly this week when prices fell below $ 1,300 an ounce, especially in Japan and Thailand, but interest waned when the market moved off the lows.
Premiums to London spot prices remained steady from last week in major bullion hubs Singapore and Hong Kong, while those in Tokyo rose slightly.
Gold prices are set to end the week about 1.5% lower after a sharp slide on Tuesday when a single massive sell order in New York sent the metal below $ 1,300 an ounce. The US Government shutdown provided some safe-haven support later to push the price up to $ 1,315.
“Demand from Thailand has been very good for all of this week, better than the last two weeks,” said one Singapore-based dealer.
“There was some demand from Indonesia but it dried up after prices recovered. On the whole, they have become a net seller,” the dealer said.
The selling stemmed in part from a weak currency. The Indonesian rupiah is Asia’s worst-performing currency this year, down 16% so far.
In Japan, gold demand and premiums rose as some bought gold to profit from an increase in the sales tax to 8% in April from 5%, which was announced this week.
Individual consumers and traders, through futures contracts, were buying gold now to sell from 1 April, when they will be able to profit by selling after the higher tax rate pushes up prices.
Importers in top consumer India were starting to place orders after more than two months when a new rule tying imports to exports caused confusion. The rule was clarified only recently.
“Slowly jewellers are placing import orders. They are comfortable with the current landed cost due to a stronger rupee. Many jewellers have much lower inventory than usual. They are preparing for the peak festive season,” said a Mumbai-based dealer with a private bullion-importing bank.
“From next week, we can see a significant improvement in imports.”
The partially convertible rupee hit a seven-week high on Friday.
India will celebrate the Hindu festivals of Dussehra in the third week of October and Diwali in the first week of November, a period when buying gold is considered auspicious.
In the cash market, gold was being sold at discount to London prices, according to MNC Bullion Director Daman Prakash Rathod.
“People are getting $ 5 to $ 10 (per ounce) discount over London prices in cash deals. Jewellers are grabbing supplies from scrap and some gold landed through illegal channels,” Rathod said.
India has set the import duty on gold at a record 10% in an effort to curb demand and reduce its trade deficit. However, this has increased smuggling from neighbouring countries, dealers have said.
Chinese demand was quiet as markets there were closed for a holiday.
