Asia Gold-Stronger yuan pushes China discounts to 7-month low

SouthGobi Resources

08/01/2021 12:27

* India premiums ease to $1.5/oz vs last week's $2.5/oz
    * Buyers waiting for a price correction -Indian wholesaler
    * Spot gold prices hit 2-month high this week

    By Nakul Iyer and Rajendra Jadhav
    BENGALURU/MUMBAI, Jan 8 (Reuters) - Physical gold discounts
slipped to their lowest since June in top consumer China this
week, as a stronger yuan encouraged some buying, while volatile
prices slowed down buying in other Asian hubs.
    Dealers in China offered discounts of $7-$10 an ounce to
benchmark global prices, compared with last week's $15-$20
discounts.
    Because of the stronger renminbi, we are likely to see more
demand in China, Peter Fung, head of dealing at Wing Fung
Precious Metals, said, adding that gold prices could flip to a
premium of around $2-$3 by mid-year.  XAUCNY=R 
    Chinese dealers were forced to offer heavy discounts for
much of 2020 as the COVID-19 pandemic choked retail demand.
    
    "Demand for gold jewellery in 2021 is expected to see a
notable gain on the back of a post-crisis recovery," said Yiyi
Gao, senior analyst at Metals Focus.
    Gao, however, noted that expected strength in gold prices
and structural consumption changes would still result in lower
offtake than in 2019.
    Spot gold prices  XAU=  scaled a two-month peak on
Wednesday.  GOL/ 
    If gold above $2,000 becomes the norm with economic
uncertainties, demand will accelerate, possibly constricting
physical supplies leading to extended delivery times similar to
that in 2020, said Vincent Tie, sales manager at Silver Bullion.
   In India, dealers charged premiums of $1.5 an ounce over
official domestic prices, inclusive of 12.5% import and 3% sales
levies, down from last week's premium of $2.5. 
    "Buyers are confused due to volatile prices. They are
waiting for a correction," said Ashok Jain, proprietor of
Mumbai-based gold wholesaler Chenaji Narsinghji.  MAUc1  
    Investment demand for coins and bars has been slowly
improving, said a Mumbai-based dealer with a bullion importing
bank.
    Demand was muted in Singapore, with premiums little changed
from the prior week at $0.80-$1.30 an ounce, while Hong Kong
premiums were unchanged at $0.50-$1.50 an ounce.
    In Japan, gold traded flat to a premium of $0.50 an ounce to
spot prices.

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China physical gold discounts continue to linger in 2021    https://tmsnrt.rs/3orNoBV
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 (Reporting by Nakul Iyer in Bengaluru and Rajendra Jadhav in
Mumbai, additional reporting by Diptendu Lahiri and Swati Verma;
editing by Uttaresh.V)
 ((nakul.iyer@thomsonreuters.com;  Within U.S. +1 646 223 8780,
Outside U.S. +91 80 6749 0417; Reuters Messaging:
nakul.iyer.thomsonreuters.com@reuters.net))