Asia Gold-High prices dent buying, silver remains attractive

PC Jeweller

16/08/2019 14:32

* Protests hit retail sector in Hong Kong - dealer
    * Indian discounts ease to $33 this week
    * China premiums at $6-$9/oz
    * India's gold market: http://tmsnrt.rs/2b1Tl6J

    By Brijesh Patel and Rajendra Jadhav
    BENGALURU/MUMBAI Aug 16 (Reuters) - High prices prompted
Asian consumers to sell back physical gold this week to lock in
profits, though price dips still attracted buying as economic
jitters burnished the metal's appeal as a haven from risk. 
    Interest in silver was also firm, with some consumers seeing
it as undervalued, dealers said.  
    Global benchmark spot gold  XAU=  hit a six-year high on
Tuesday and was headed for a third straight week of gains, up
1%. Silver was also on track for a 1.5% weekly rise.  GOL/ 
    "We're consistently seeing people coming to sell gold," said
Brian Lan, managing director at Singapore dealer GoldSilver
Central. "Refineries are all almost at maximum capacity now due
to scrap gold selling." 
     "On the other hand, we're seeing more buying of silver
because many investors see it as an undervalued asset."
    Consumers have also been buying gold every time there is a
brief price dip, he added.  
    An inversion of the U.S. yield curve this week for the first
time since 2007 exacerbated concerns a recession is on the way,
prompting inflows into safe havens such as gold and the Japanese
yen.
    In top gold consumer China, premiums eased slightly to $6-$9
per ounce over the benchmark, from $9-$10 last week.
    "Interest is coming mostly from the investment side," said
Ronald Leung, chief dealer at Lee Cheong Gold Dealers in Hong
Kong.
    In Singapore, gold was sold at a premium of $0.50-$0.80 an
ounce, unchanged from the week ending August 2. 
    In India, demand remained subdued as domestic prices soared,
tracking gains in overseas market and a weak rupee. Gold futures
 MAUc1  hit a record high of 38,666 Indian rupees ($543.44) per
10 grams earlier this week. 
    "People are making smaller purchases than normal due to the
price rise," said B Govindan, chairman of Kochi-based Bhima
Jewellery.
    Dealers offered discounts of up to $33 an ounce over
official domestic prices, down from last week's $37 discounts,
which were the highest since August 2016. The domestic price
includes a 12.5% import tax and 3% sales tax.
    Jewellers were not placing new orders due to weak retail
demand, said a Mumbai-based dealer with a private bullion
importing bank, adding "everyone is desperately waiting for a
price correction".
    India's gold imports in July plunged 55% from a year ago to
a three-year low.  urn:newsml:reuters.com:*:nL4N2513CN
    In Hong Kong, premiums were unchanged at $0.50-$1.20. The
trade war and months of protests have sparked fears of a
recession in the financial hub.  urn:newsml:reuters.com:*:nH9N22Q020
    "Demand is very weak because of high prices and the unrest
has affected the retail market, especially jewellery demand,"
said a bullion dealer in Hong Kong.
    In Japan, gold was sold at par versus the benchmark compared
with $0.25 discounts last week, with most investors selling gold
because of the rising yen, a Tokyo-based trader said.

($1 = 71.1500 Indian rupees)

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India's gold market    http://tmsnrt.rs/2b1Tl6J )
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 (Reporting by Brijesh Patel in Bengaluru, Rajendra Jadhav in
Mumbai; Editing by Arpan Varghese and Jan Harvey)
 ((Brijesh.Patel1@thomsonreuters.com; Within U.S. +1 651 848
5832, Outside U.S. +91 8067493865; Reuters Messaging:
Brijesh.Patel1.thomsonreuters.com@reuters.net))