Lockdown measures continue to disrupt retail buyers in key gold hubs, causing a significant impact on physical gold demand in Asia. The closure of jewelry shops due to coronavirus restrictions has led to a noticeable decrease in retail purchases. However, despite these challenges, some regions have observed a steady increase in demand from investors looking to secure a safe haven during these turbulent times.
In China, the world’s largest gold consumer, dealers have been offering bullion at discounts of approximately $50 per ounce compared to benchmark spot prices. This represents a decrease from the previous week’s discounts of $50-$70, marking the most substantial discounts recorded since 2014. Ronald Leung, the chief dealer at Lee Cheong Gold Dealers in Hong Kong, mentioned that even with the reopening of some shops, consumer interest in purchasing gold remains tepid due to its perceived high-end nature.
On the other hand, India continues to face suspension in physical trading as a result of the ongoing coronavirus outbreak. Jewelry showrooms remain closed in anticipation of the country’s prominent gold buying festival, Akshaya Tritiya, scheduled for April 26. Harshad Ajmera, the proprietor of JJ Gold House in Kolkata, pointed out that unlike previous years, where jewelers would stock up ahead of the festival, there is minimal buying activity this year. Many jewelers have transitioned to online sales to accommodate customers, but retail buyers are wary due to elevated prices and uncertainties surrounding deliveries.
In Hong Kong and Singapore, the demand for gold has remained steady on the investment front. Nonetheless, retail buying activity is subdued, prompting dealers to take pre-orders for future fulfillment. Premiums in Hong Kong range from $0.40 to $2.00 per ounce, with some dealers quoting premiums as high as $4.00. In Singapore, gold is being sold with average premiums of $1.50 to $5 per ounce for gold bars.
Despite the challenges facing the gold industry, Japan has reported premiums ranging from $0.50 to $1 per ounce, with limited activity and major gold retailer Tanaka Kikinzoku closing all its stores. Overall, the current situation has introduced uncertainties in the gold market, with retail buyers displaying hesitancy towards making purchases and economic difficulties impacting trading activities in major gold hubs worldwide.
For more information on the gold market trends, you can visit World Gold Council and Bloomberg Commodities.
