Consumers in leading Asian hubs continued to sell off physical gold this week, with some switching their holdings to silver, after a jump in prices that also attracted interest from investors betting further gains.
Global benchmark spot gold surpassed $1,450 an ounce for the first time in more than six years on Friday.
“Demand has been muted, with most people selling off gold to take profit,” said Brian Lan, managing director at Singapore dealer GoldSilver Central.
However, with many people looking to rebalance their portfolio “gold is the asset to be in this year,” he added.
In top consumer China gold was sold at a premium of $10-$11 per ounce over the benchmark, little changed from last week’s $10-$13 range.
“Investment buying has picked up somewhat,” said Samson Li, a Hong Kong-based precious metals analyst with Refinitiv GFMS, adding that prices would have to hold near cureent levels for longer to trigger more interest.
In Hong Kong, gold was sold at a premium of $0.50-$1.20 an ounce, compared with a discount of 30 cents to a $1.20 premium last week. In Singapore, premiums of $0.40-$0.60 were charged, compared with $0.60-$1 previously.
“There is renewed interest to enter the market and to buy more gold. This trend can be seen in Hong Kong, Singapore and the UK,” said Joshua Rotbart, managing partner at J. Rotbart & Co in Hong Kong.
“Scrap continues to be available for refiners in relatively large quantities.”
The steep rally in gold is prompting some to switch to relatively cheaper silver, traders said.
“In a way, the gold train has left the station, but silver is yet to leave,” said Vincent Tie, sales manager at Silver Bullion.
In Japan, gold was sold at a $0.25 discount, having been at benchmark parity last week, a Tokyo-based trader said.
In India, the world’s second-biggest gold consumer, dealers were forced to offer the highest discounts since August 2016, at about $33 over official domestic prices. This compared with $20 discounts last week.
“For the past few weeks, demand has been very weak. Jewellers have enough stocks and they don’t want to buy at record levels,” said Chanda Venkatesh, managing director of CapsGold, a bullion merchant in the southern city of Hyderabad.
India recently raised import duties on gold and other precious metals to 12.5% from 10%.
Gold futures hit a record of 35,409 rupees per 10 grams on Friday.
“Price rises in the world market and a duty hike by the government is prompting a few people to book profits,” said one Mumbai-based dealer with a private bullion-importing bank. “They’re selling old stocks instead of buying.”
(By Brijesh Patel, Arpan Varghese and Arpan Varghese; Editing by David Goodman)