Economy

Asia Sees Gold Rush Despite Near-Record Prices

Published On Wed, 12 Jun 2024
. Meenal Chakravarthy
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In Singapore, industry sources note a notable surge in demand for gold across Asia, despite prices hovering near the peak they reached in May. This uptick in demand is attributed to buyers seeking to hedge against geopolitical and economic uncertainties. The current spot gold price stands just above US$2,300 per ounce, marking a 12% increase year-to-date and trailing only six percent below last month's record high. Analysts point to diminished confidence in alternative investment avenues like real estate and equities as a contributing factor to the heightened demand for gold.
Ruth Crowell, CEO of the London Bullion Market Association, suggests that once the macro-economic landscape stabilizes, interest may shift back to real estate and equities, potentially influencing gold price sensitivity. In Japan, despite the record high gold prices, there's a notable bullish sentiment among investors, according to Bruce Ikemizu from the Japan Bullion Market Association. Chinese investors, grappling with currency devaluation, a prolonged real estate slump, and trade tensions, are turning to gold, with purchases of gold coins and bars surging by 27% in the first quarter of the year.
Albert Cheng, CEO of the Singapore Bullion Market Association, emphasizes a trend where consumers prioritize buying gold regardless of price. This sentiment is echoed in Thailand, where queues form outside gold stores at the slightest mention of price hikes, as observed by Nuttapong Hirunyasiri, CEO of MTS Gold Group.
However, in Vietnam, despite domestic prices holding stubbornly high premiums over global prices, investors are flocking to acquire gold. Conversely, India and Australia exhibit sensitivity to high gold prices. Indian gold prices have consistently traded at a discount to international rates for five consecutive weeks, reflecting subdued demand in the second-largest bullion market. Meanwhile, the Perth Mint reports a 30% monthly decline in gold product sales in May.
India's gold imports are projected to decline by nearly a fifth in 2024, primarily due to record-high prices prompting retail consumers to opt for exchanging old jewelry rather than purchasing new items.
Disclaimer: This image is taken from Reuters.
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