Soaring gold prices erode lustre in Covid-hit retail hubs

BENGALURU/MUMBAI: Physical gold remained out of favour in most Asian hubs this week as a worsening pandemic kept retail buyers away with global benchmark spot prices at historic highs, while logistical challenges plagued the Indian market.

Spot gold scaled a record US$2,072.50 per ounce on Friday.

Dealers in top buyer China offered discounts of US$70-US$60 per ounce against the benchmark versus last week’s record US$88-US$42 range.

“Young people have no interest in buying gold jewellery and due to the pandemic, there are no tourists,” said Peter Fung, head of dealing at Wing Fung Precious Metals.

In Hong Kong, dealers charged anywhere between a US$2 per ounce discount to a US$1.5 premium.

“Selling has increased and the Chinese are more willing to trade silver,” said Samson Li, a Hong Kong-based analyst at Refinitiv GFMS.

In India, premiums eased to about US$4 an ounce over official domestic prices, from last week’s US$8.

Limited supplies due to the suspension of international flights has been allowing dealers to charge premiums, said a Mumbai-based dealer with a bullion importing bank.

“A few investors are buying coins and bars, but their share is tiny in the overall market,” said Harshad Ajmera, proprietor of JJ Gold House, a wholesaler in the city of Kolkata.

In Singapore, premiums were unchanged at US$0.8-US$1.50, while Japan saw premiums of US$0.50.

Investors sold gold to take profits, while high net worth clients awaited a price correction to accumulate more metal, said Brian Lan of Singapore dealer GoldSilver. – Aug 8, 2020, Reuters

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