Indian weddings add buoyancy to gold markets in Asia

Indian weddings add buoyancy to gold markets in Asia
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First Published: Thu, May 10 2007. 12 13 AM IST

In demand: Gold’s fall from an 11-month high in April is luring buyers.
In demand: Gold’s fall from an 11-month high in April is luring buyers.
Updated: Thu, May 10 2007. 12 13 AM IST
Singapore: Purchases related to the wedding season in India, the world’s largest gold consumer, have dominated gold trading in Asia this week, but volatile prices curbed the appetite of Japanese investors.
A firm rupiah has boosted purchases from jewellers in Indonesia, Southeast Asia’s largest buyer, but trading has yet to pick up in China after the week-long Golden Week holiday, dealers said on Wednesday, 9 May. “Demand is still good and, in fact, Indonesia has been buying gold because of the strong rupiah. They would normally sell, especially if the gold price goes up,” said a dealer in Singapore.
In demand: Gold’s fall from an 11-month high in April is luring buyers.
The rupiah was firm around 8,900 per dollar (219 per rupee) on Wednesday even though the central bank cut interest rates the previous day and saw room for further reductions. Dealers said such cuts would boost foreign demand for local assets and, therefore, the currency.
Gold’s fall from an 11-month high of around $693 (Rs28,413) hit in late April was still attracting buyers in India, dealers said, even though the wedding season was now nearing its end. “India is buying each time the price comes off,” said the Singapore dealer, who quoted premiums for gold bars at 10 US cents an ounce to the spot London price.
Gold jewellery is the most common gift during religious events in India and forms an essential part of the dowry basket. India accounts for 20% of the annual global demand for gold, devouring 800 tonnes of the metal, mostly as jewellery.
Premiums were unchanged in Hong Kong at 20 US cents an ounce to the spot London price. “There’s not much movement in China. Of course, there’s some buying there, but not too much. Maybe a technical correction is coming in,” said Ronald Leung, director of Lee Cheong Gold Dealers in Hong Kong.
After hitting its highest on 23 April, gold tumbled to a one-month low of around $667 on 2 May because of a rise in the US dollar. Currently trading around $685, the metal may see more of a correction because of its failure to go through $700, a level last seen in May 2006, dealers said.
“We could find some demand from the industrial side after the holiday,” said a dealer in Tokyo, referring to Japan’s Golden Week holiday last week. “However, because the price of gold in Japanese yen is still very high, liquidation from the general public is getting stronger,” he said.
Gold bars in Tokyo were offered at a premium of 50 US cents to the spot London price, unchanged from last week.
Purchases from Japanese investors helped gold reach multi-year highs in 2006, when it spiked to a 26-year high of $730 an ounce in mid-May.
But many investors were likely to stay on the sidelines this week, ahead of central bank meetings. “Investors will take their cues from the rate-setting decisions, which often affect gold prices because of interactions in the currency markets,” Investec Australia said in a daily report.
On Wednesday, standard gold closed at Rs9,120 per 10gm in the Mumbai bullion market.
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First Published: Thu, May 10 2007. 12 13 AM IST
More Topics: Money Matters | Commodities |