Premiums on physical gold jumped this week, driven by supply constraints and strong demand for bullion as a safe-haven, as economic worries mount in top consumer China.
“The downturn in China’s real estate sector is exerting an adverse influence on consumer expenditure, thereby dampening the overall economic rebound,” said Bernard Sin, regional director, Greater China, at MKS PAMP, adding that “investors are actively searching for safer investment options.”
Chinese dealers sold gold at premiums of $40 to $60 an ounce over global spot prices, versus $33-$43 last week.
Data from the World Gold Council showed premiums as high as $55.3 on average as of Aug. 17.
But independent analyst Ross Norman said the elevated Chinese premiums have more to do with supply constraints than with excessively strong demand, “given a reduction in the number of import licenses from the PBOC to domestic banks.”
Asia Gold: China premiums spike as economic woes spur safe-haven
China’s gold imports via Hong Kong fell in July to a six-month low.
In Hong Kong, gold changed hands at a $0.5 to $3 premiums, while Singapore dealers charged $1.75-$3 premiums.
“There is higher gold buying as investors are taking advantage of sub $1,900 gold prices,” said Vincent Tie, sales manager at Singapore dealer Silver Bullion.
In India, dealers charged premiums of about $3 an ounce over official domestic prices - inclusive of 15% import and 3% sales levies - unchanged from last week.
“Consumer demand has improved in the past two weeks due to price corrections, but many buyers are still awaiting further price adjustments,” said Ashok Jain, owner of Mumbai-based gold wholesaler Chenaji Narsingji.
Local prices last week fell to 58,275 rupees per 10 grams, the lowest since July 6.
Jewellers from the state of Kerala reported improved retail purchases because of the Onam festival, said a Mumbai-based bullion dealer.
Japanese dealers sold gold at $0.50 discounts, amid higher local rates.
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