Stalled activity due to the coronavirus pandemic saw the continuation of weak physical gold demand in Asia.
In China, the world’s biggest consumer, low demand continued from last week, despite dealers offered massive discounts. Massive discounts of about $50 to $70 over benchmark spot prices in China as traders and dealers quoted the biggest discount on record since 2014. According to dealers, until the coronavirus disappears there will not be much physical demand in China. Spot gold prices traded between $1,672.69 and $1,746.50 an ounce this week, a peak since 2012. Jewellery stores that stocked up in January are now stuck with all of that and this week were more interested in selling for cash.
Image credit: stevebidmead (Pixabay)
Traders said that the Hong Kong market did exhibit some signs of steady activity, with premiums around $0.50-$1.00. Singapore saw premiums of $1.50-$3 an ounce, although restrictions strained supply and reduced retail activity. Singapore's annual exports growth accelerated in March, driven by a jump in shipments of pharmaceuticals and gold. However, a high premium on retail gold has slowed physical demand.
In India, the world's second-biggest bullion consumer, an extended lockdown kept physical gold trading suspended while local prices soared to a record high. As per a Mumbai-based dealer with a bullion importing bank, Bullion industry is not expecting any kind of respite from the lockdown shortly. India's gold consumption in 2020 could fall as much as 50% from last year as the lockdown has closed jewellery stores during the key festival and wedding seasons.
Japan, which also recently declared an emergency due to the outbreak, saw premiums of $0.50-$1.00 an ounce, a Tokyo-based retailer said, adding supply constraints led to a slight rise in premiums from last week's $0.50 level.
Meanwhile, in Thailand, cash-strapped citizens rushed to sell gold in Bangkok's Chinatown as prices in the Thai baht surged to an all-time high this week.
Aruna Gaitonde, Editor in Chief of the Asian Bureau, Rough & Polished
