Posts Tagged: ‘gold’

Don’t expect India to save the gold market

July 30, 2015 Posted by admin

india goldAjay Verma / REUTERSA salesgirl shows a gold necklace to customers at a jewellery showroom in the northern Indian city of Chandigarh November 11, 2012.

MANILA/MUMBAI (Reuters) – Blame poor rains or a lack of weddings, but Indians, for whom gold is the investment of choice, aren’t rushing to buy bullion after this week’s sharp sell-off.

India and China are the world’s top gold buyers and, after massive selling on the Shanghai Gold Exchange on Monday helped drive down gold prices by 4 percent to a 5-year low, traders hoped demand would perk up in India, or elsewhere in Asia.

The last big slide in gold prices – a 13 percent drop in just two consecutive trading days in April 2013 – prompted weeks of long queues of Indians outside gold showrooms.

Not this time. India’s gold appetite – it accounts for more than a fifth of global demand – remains sluggish, with only modest local premiums to the global spot benchmark.

“That’s really a bearish sign, when the main consuming region remains on the sidelines after such a price drop to a multi-year low,” Commerzbank senior oil analyst Carsten Fritsch told the Reuters Global Gold Forum on Tuesday.

“Who’s going to buy gold if not the Asians?”

India Gold Wedding Jewelry ModelsAP Photo/Ajit SolankiModels display the wedding jewelry during the inauguration of a three-day long Shaadi (marriage) Festival 2005 in Ahmadabad, India, Friday, Sept. 2, 2005.

OUT OF WEDDING SEASON

As the gold price dropped on Monday to $1,088.05 an ounce, its lowest since March 2010, Indian jewelers sent text messages to clients encouraging them to buy gold and offering to cut by half the cost of making it into jewellery.

While the price slide sparked some interest, there has been no repeat of the 2013 buying frenzy. “This is not a festive or wedding season, so interest remains low,” said Kumar Jain, vice-president of the Mumbai Jewellers Association.

This year’s Hindu calendar has fewer auspicious dates for weddings, a traditional time for buying and giving gold.

The Indian central bank’s inflation targeting efforts have helped bring price rises under control, removing one main reason for Indians to hold gold as a store of value. The rate of inflation has halved to 5.4 percent from double-digits at the end of 2013.

India spent a record $15.2 billion on gold imports in April-May 2013, with gold bars selling locally for more than $20 an ounce above the global spot price. That premium is now just around $1 an ounce.

“Many Indian consumers are not buying, thinking there’s still scope for downside in prices,” said Daman Prakash Rathod, a director at Chennai-based wholesaler MNC Bullion.

And weak monsoon rains mean many farmers from India’s rural areas, which make up nearly two-thirds of domestic gold demand, don’t now have the ready cash to buy gold, Rathod noted.

Morgan Stanley estimates Indian households own, directly or indirectly, around $1 trillion in gold, about the same as in bank fixed deposits, and against just $400 billion in shares – though low-cost stockbrokers are looking to use a 42 percent drop in gold prices over the past four years to lure investors into buying more shares.

India Gold Jewelry BanglesREUTERS/Mukesh GuptaA worker counts gold bangles at a jewellery-making workshop in Jammu October 17, 2011.

WATCHING PRICES DROP

The lackluster physical demand for gold is mirrored elsewhere across Asia, with premiums in Hong Kong up by just 10 cents from last week to 90 cents-$1.10 an ounce and those in Singapore stuck at around $1 for months, traders said.

“There was a bit of buying and then no more inquiries. Gold prices are dropping, dropping, dropping – so people don’t want to buy for the time being,” Ronald Leung, chief dealer at Lee Cheong Gold Dealers in Hong Kong, said on Tuesday.

Bullion prices generally have come under pressure from expectations of higher interest rates in the United States, which boosts the dollar and makes non-interest bearing assets such as gold less appealing.

China’s appetite for gold, too, has waned after it also imported record volumes in 2013. Fast-rising stock prices, a slowing economy and Beijing’s anti-corruption drive, which has deterred some from making conspicuous ‘luxury’ buys, have all diverted money away from bullion.

China revealed on Friday a 57 percent increase in its gold reserves from 2009, far less than the market had estimated.

And even if gold prices fall further – spot prices rose about 1 percent to $1,109 an ounce on Tuesday – there’s no guarantee that would encourage buyers.

“If gold falls below $1,000, would there still be interest in holding gold?” asked a Singapore-based trader.

(Additional reporting by Clara Ferreira Marques and Krishna Das in New Delhi; Editing by Ian Geoghegan)

Read the original article on Reuters. Copyright 2015. Follow Reuters on Twitter.

Article source: http://www.businessinsider.com/dont-expect-india-to-save-the-gold-market-2015-7

Dave’s Gold & Jewelry Repair brings value to broadway

July 29, 2015 Posted by admin



The new space that Dave Goline bought for his jewelry business used to be a storage room.

It took me 100 days to get everything in here, said Goline, 56, of Lorain. I did not get a day off for 100 days, and I pushed and pushed and pushed and pushed to make things happen.

Daves Gold Jewelry Repair, 300 Broadway, No. 101a in Lorain, opened in the Lorain City Center in June, nearly 10 years after the Amherst building where the business used to be located was demolished.

When searching for a new storefront, Goline said he looked at more than 60 locations in three counties, but decided on downtown Lorain, near where, as a boy, he used to wait for his father to return from work at the shipyards.

Also, in the lapse of time he was without a store, he refurbished his turn-of-the-century jeweler benches.

Now, Goline bellies up to them, performing his services next to a tall window, in full view of passers-by on Broadway.

It was my calling to come down here; God put it on my heart, he said. This is where the needs great. You have a great population to pull from that cleaned up the river. People are coming down for the concerts on the weekend.

Goline started in the jewelry trade in 1985, began work as a goldsmith in 1991 and opened Daves Gold Jewelry in 1994.

Some of the services he has taken on include jewelry inspection, repair and design; diamond ring re-tipping; gold-, silver- and platinum-smithing; ring cleaning, sizing and re-sizing; chain repair; watch battery replacement; metal watchband link replacement; watchband clasp repair; and eyeglass frame soldering.

I focus on taking care of the customers needs, whatever they may be, he said. It can be a simple watch battery or it can even be something complex.

Goline said he enjoys when a customer digs something out of an old jewelry case and he is able to restore it and bring it back to life.

He said an eye doctor approached him awhile back and asked if could fix some glasses, and thats when he began soldering frames.

Goline said he will solder frames for a fraction of the cost it takes to get a new pair, which benefits everyone from veterans to senior citizens to people without insurance.

If someone doesnt have a vehicle or has time constraints, the business is within walking distance of a lot of other buildings, and service is quick, he said.

Some repairs can be done in two or three hours, time permitting, Goline said.

Goline also sells jewelry, including engagement rings, wedding rings, anniversary rings and mothers and fathers rings.

As the holiday season approaches, he said he will sell certified diamonds as well.

Aside from Spectrum Cafe, Daves Gold Jewelry is the only retail operation in the City Center.

Goline said he has a good relationship with his competitors, Nielsen Jewelers, 753 Broadway in Lorain, and Marzavas and Sons Swiss American Jewelers, 800 Broadway in Lorain.

He said he made a conscious effort to be farther north up Broadway than his competitors.

Im here for the long run, he said. Im here for the new growth of downtown.

Daves Gold Jewelry Repair is open 10:30 a.m. to 5:30 p.m., Monday through Friday; by appointment only Saturday; and closed Sunday.

To book an appointment, call Goline at 440-245-3283.

Article source: http://www.morningjournal.com/general-news/20150725/daves-gold-jewelry-repair-brings-value-to-broadway

The Price of Gold Drops, Consumers Could Pay Less for Jewelry – WJBF

July 28, 2015 Posted by admin

Augusta, GA —

Nationally the price of gold took a dive and that is having an impact on local shops that are buying and selling the metal.

Despite the overall price of gold going down, purchasing or selling gold rings, pendants and earrings might become a little more cost efficient for consumers.

The Gold Shop owner Leonard Tankersley told News Channel 6, “Your money is going to buy you more gold.”

Gold rings at The Gold Shop in Martinez could cost a little less since the price of gold dropped.
Gold rings at The Gold Shop in Martinez could cost a little less since the price of gold dropped.

Tankersley tells us the price of gold dropped because The Federal Reserve raised interest rates, improving the U.S. economy and making the dollar stronger.

“A month ago a pair of earrings that were selling for $100 to $150 is going to be less than $100 this season,” he told us.

The yellow metal is trading at about $1,000 an ounce, which is about 40 percent below the 2011 peak.  Analysts call the drop in gold futures a five year low, not having hit the current level since March of 2010.  Gold even hit a 10-day decline, the longest streak for gold since 1996.

James McClellan watches what gold is trading for all the time, so he’s always buying and selling.

“I look for rings and jewelry with different kinds of stones and settings and necklaces,” the Thomson citizen said.

McClellan can purchase his jewelry at a cheaper price.  Tankersley said that’s because he purchases gold for a cheaper cost at jewelry shows and then pass that savings on to the consumer.

For those wanting to just sell gold to a local store, Gold Central’s Jennifer Hyatt told us the transaction may be a little different.

Gold Central weighs gold to pay sellers.
Gold Central weighs gold to pay sellers.

“The payout is always based on the weight.  So, it just all depends on the weight and the karat that it is. Even with the decrease in the past two weeks, you may see a couple of dollars difference,” Hyatt said.

Also, Hyatt said many local shops that buy gold have left the area, possibly due to the gold falls.  But Gold Central has seen growth in the past five years.

Hyatt added, “We have seen an increase each year, so it seems as if everyone around us has done that decrease and we have seen an increase.”

Consumers may want to shop around to find the merchant that will give them the best deal since a lot of the buyers shop at the same shows.

Article source: http://wjbf.com/2015/07/24/the-price-of-gold-drops-consumers-could-pay-less-for-jewelry/

Dave’s Gold & Jewelry Repair brings value to broadway – The Morning Journal

July 27, 2015 Posted by admin



The new space that Dave Goline bought for his jewelry business used to be a storage room.

It took me 100 days to get everything in here, said Goline, 56, of Lorain. I did not get a day off for 100 days, and I pushed and pushed and pushed and pushed to make things happen.

Daves Gold Jewelry Repair, 300 Broadway, No. 101a in Lorain, opened in the Lorain City Center in June, nearly 10 years after the Amherst building where the business used to be located was demolished.

When searching for a new storefront, Goline said he looked at more than 60 locations in three counties, but decided on downtown Lorain, near where, as a boy, he used to wait for his father to return from work at the shipyards.

Also, in the lapse of time he was without a store, he refurbished his turn-of-the-century jeweler benches.

Now, Goline bellies up to them, performing his services next to a tall window, in full view of passers-by on Broadway.

It was my calling to come down here; God put it on my heart, he said. This is where the needs great. You have a great population to pull from that cleaned up the river. People are coming down for the concerts on the weekend.

Goline started in the jewelry trade in 1985, began work as a goldsmith in 1991 and opened Daves Gold Jewelry in 1994.

Some of the services he has taken on include jewelry inspection, repair and design; diamond ring re-tipping; gold-, silver- and platinum-smithing; ring cleaning, sizing and re-sizing; chain repair; watch battery replacement; metal watchband link replacement; watchband clasp repair; and eyeglass frame soldering.

I focus on taking care of the customers needs, whatever they may be, he said. It can be a simple watch battery or it can even be something complex.

Goline said he enjoys when a customer digs something out of an old jewelry case and he is able to restore it and bring it back to life.

He said an eye doctor approached him awhile back and asked if could fix some glasses, and thats when he began soldering frames.

Goline said he will solder frames for a fraction of the cost it takes to get a new pair, which benefits everyone from veterans to senior citizens to people without insurance.

If someone doesnt have a vehicle or has time constraints, the business is within walking distance of a lot of other buildings, and service is quick, he said.

Some repairs can be done in two or three hours, time permitting, Goline said.

Goline also sells jewelry, including engagement rings, wedding rings, anniversary rings and mothers and fathers rings.

As the holiday season approaches, he said he will sell certified diamonds as well.

Aside from Spectrum Cafe, Daves Gold Jewelry is the only retail operation in the City Center.

Goline said he has a good relationship with his competitors, Nielsen Jewelers, 753 Broadway in Lorain, and Marzavas and Sons Swiss American Jewelers, 800 Broadway in Lorain.

He said he made a conscious effort to be farther north up Broadway than his competitors.

Im here for the long run, he said. Im here for the new growth of downtown.

Daves Gold Jewelry Repair is open 10:30 a.m. to 5:30 p.m., Monday through Friday; by appointment only Saturday; and closed Sunday.

To book an appointment, call Goline at 440-245-3283.

Article source: http://www.morningjournal.com/general-news/20150725/daves-gold-jewelry-repair-brings-value-to-broadway

The Price of Gold Drops, Consumers Could Pay Less for Jewelry | WJBF-TV – WJBF … – WJBF

July 26, 2015 Posted by admin

Augusta, GA —

Nationally the price of gold took a dive and that is having an impact on local shops that are buying and selling the metal.

Despite the overall price of gold going down, purchasing or selling gold rings, pendants and earrings might become a little more cost efficient for consumers.

The Gold Shop owner Leonard Tankersley told News Channel 6, “Your money is going to buy you more gold.”

Gold rings at The Gold Shop in Martinez could cost a little less since the price of gold dropped.
Gold rings at The Gold Shop in Martinez could cost a little less since the price of gold dropped.

Tankersley tells us the price of gold dropped because The Federal Reserve raised interest rates, improving the U.S. economy and making the dollar stronger.

“A month ago a pair of earrings that were selling for $100 to $150 is going to be less than $100 this season,” he told us.

The yellow metal is trading at about $1,000 an ounce, which is about 40 percent below the 2011 peak.  Analysts call the drop in gold futures a five year low, not having hit the current level since March of 2010.  Gold even hit a 10-day decline, the longest streak for gold since 1996.

James McClellan watches what gold is trading for all the time, so he’s always buying and selling.

“I look for rings and jewelry with different kinds of stones and settings and necklaces,” the Thomson citizen said.

McClellan can purchase his jewelry at a cheaper price.  Tankersley said that’s because he purchases gold for a cheaper cost at jewelry shows and then pass that savings on to the consumer.

For those wanting to just sell gold to a local store, Gold Central’s Jennifer Hyatt told us the transaction may be a little different.

Gold Central weighs gold to pay sellers.
Gold Central weighs gold to pay sellers.

“The payout is always based on the weight.  So, it just all depends on the weight and the karat that it is. Even with the decrease in the past two weeks, you may see a couple of dollars difference,” Hyatt said.

Also, Hyatt said many local shops that buy gold have left the area, possibly due to the gold falls.  But Gold Central has seen growth in the past five years.

Hyatt added, “We have seen an increase each year, so it seems as if everyone around us has done that decrease and we have seen an increase.”

Consumers may want to shop around to find the merchant that will give them the best deal since a lot of the buyers shop at the same shows.

Article source: http://wjbf.com/2015/07/24/the-price-of-gold-drops-consumers-could-pay-less-for-jewelry/

Does Jewelry or Central Bank Demand Drive the Gold Price? :: The Market Oracle …

July 25, 2015 Posted by admin


Commodities / Gold and Silver 2015
Jul 24, 2015 – 05:51 PM GMT

By: Arkadiusz_Sieron



We have already shown that neither mining production, nor technological demand drives gold prices, since gold – thanks to its uniquely high stock-to-flows – resembles an asset rather than commodity. Before we look at the drivers of gold investment demand, we have to analyze the role of jewelry demand and central bank buying in the gold price formation. These two categories are often considered as important drivers for the gold price, but are they really?

Let’s start with the jewelry demand. There are countless articles in the financial press stating that demand for jewelry, especially from Asians, drives gold prices. Many analysts even suggest that the growing incomes in Asia, particularly in China and India, will spur demand for gold, which will make prices skyrocket (according to this article, the price of gold should double in the next 15 years thanks to the gold lovers from Asia). Unfortunately, they are all wrong. Why?

The reason is simple. The gold prices are not driven significantly by consumer demand, but by investment demand. Consumers do not drive prices, because when the prices rise, they buy less, and vice versa. Only professional investors can provoke a stable, sustained rise in the gold price as happened during the past bull markets. Indeed, the rising prices of gold in the 1970s and 2000s coincided with declining jewelry demand, while the bear market in 1980s and 1990s was accompanied with a steady rise in demand for jewelry (see: chart 1).

Chart 1: Jewelry demand (in tons; blue line, right scale) and average annual gold prices (yellow line, left scale) from 1997 to 2014

Jewelry demand was generally falling in 2000s, while the gold price was rising. The high in jewelry demand in 1999-2000 coincided with a 20-year low in the gold prices, while the low in 2009 occurred during the gold bull market. And more recently, gold prices fell by almost 30 percent in 2013, while gold jewelry demand saw the largest volume increase since 1997 (by 17 percent annually).

This is the exact opposite of what we might expect if the jewelry demand would have really driven the gold price. In reality, the gold price affects the jewelry demand significantly, not the other round way. This category of demand has high price elasticity, especially in the Western countries, where gold jewelry is bought almost solely for decorative purposes as a luxury consumption good.

By the way, the same applies to scrap supplies. Recycling is also very sensitive to changes in the gold price, so when the gold price rises, scrap supplies increase, and vice versa; thus, recycling follows the gold price rather than driving it.

To be sure, jewelry demand, especially in Asia, represents investment demand in disguise rather than simple consumer demand, but it means that jewelry demand can drive gold price only as an investment demand. Contrarily, as a consumption demand it can provide only some upward support and follow gold price rather than setting it.

So, don’t put too much weight on all these bullish analyses focusing on demand from India and China. The GDP per capita and disposable incomes have been rising there for decades, and have also done so during gold bear markets. Asian demand does not drive the gold price, but follows it. For example, in 2013, gold prices fell by almost 30 percent (also against Yuan), and Chinese households became the world’s heaviest buyers of the yellow metal, while Indian and Chinese demand fell in the first quarter of 2014, when gold prices recovered from earlier losses.

The demand from central banks is a bit more complicated, since they buy and sell gold based on political reasons concerning the value and safety of national reserves and their expected need for the metal, rather than to gain a profit. Therefore, their activity does not follow gold prices exactly, as it was demonstrated by the Bank of England, which sold 395 tons of gold between 1999 and 2002 when the market was at its lowest. But does central bank buying drive the gold price? We do not think so. Just look at chart 2.

Chart 2: Central banks’ demand (in tons; blue line, right scale) and average annual gold prices (yellow line, left scale) from 1997 to 2014

As you can see, the gold price was rising since 2001, despite the fact that central banks were heavy sellers of gold from 1989 to 2009. Contrarily, the average gold price fell from $1,411 in 2013 to $1,266 in 2014, although central banks increased their net purchases from 409.3 tons to 477.2 tons.

Moreover, central banks possess only around 15-20 percent of total world gold holdings, while their annual purchases equal only the sum traded during a single day at the London market. It seems that central bank demand can put a floor under the price (or strengthen the existing market sentiment) rather than drive it.

The key point is that neither jewelry nor official demand drives the gold prices. Demand for gold jewelry is highly elastic and follows the gold price rather than sets it. Central banks’ purchases are relatively small and conducted mainly due to reserve management policy considerations (e.g., due to diversification), not because of the profit motive. In reality, the factor that really drives the price of gold is investment demand.

Thank you.

Arkadiusz Sieron

Sunshine Profits‘ Market Overview Editor

Disclaimer

All essays, research and information found above represent analyses and opinions of Przemyslaw Radomski, CFA and Sunshine Profits’ associates only. As such, it may prove wrong and be a subject to change without notice. Opinions and analyses were based on data available to authors of respective essays at the time of writing. Although the information provided above is based on careful research and sources that are believed to be accurate, Przemyslaw Radomski, CFA and his associates do not guarantee the accuracy or thoroughness of the data or information reported. The opinions published above are neither an offer nor a recommendation to purchase or sell any securities. Mr. Radomski is not a Registered Securities Advisor. By reading Przemyslaw Radomski’s, CFA reports you fully agree that he will not be held responsible or liable for any decisions you make regarding any information provided in these reports. Investing, trading and speculation in any financial markets may involve high risk of loss. Przemyslaw Radomski, CFA, Sunshine Profits’ employees and affiliates as well as members of their families may have a short or long position in any securities, including those mentioned in any of the reports or essays, and may make additional purchases and/or sales of those securities without notice.

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Article source: http://www.marketoracle.co.uk/Article51589.html

Gold’s plunge sparks retail demand in China, India

July 24, 2015 Posted by admin

HONG KONG–Gold’s plunge to five-year lows this week has prompted a swift rise in demand from jewelry retailers in China and India, the world’s top consumers of gold, leading to a doubling of premiums paid on physical gold.

At the same time, sales of gold coins from Australia’s biggest bullion mint have been rising sharply, likely thanks to some bargain-hunting.

The increase in demand is expected to provide a cushion to the battering that gold has taken this week, although it may not be enough to offset the bearish outlook on the yellow metal amid growing expectations of a rise in U.S. interest rates and a lack of safe haven demand. India, together with China, accounts for around half of the global demand.

Spot gold traded Wednesday at $1,094 an ounce, just above the more than five-year low touched Monday and off nearly 5% from a week ago. Prices for the precious metal, which peaked at nearly $1,900 in August 2011, have been under pressure since Federal Reserve Chairwoman Janet Yellen said late last week that a rise in U.S. interest rates is in the cards this year and China’s central bank reported much lower-than-expected gold reserves.

This week’s pickup in demand China is a welcome sign as interest had waned in recent months as investors flocked to the soaring stock market.

Until Chinese equity markets turned south in late June, the lack of demand meant gold was available at a small discount to international prices. But the premiums paid on the precious metal for immediate delivery rose to $2 a troy ounce by late June and are now quoted around $4 an ounce, said a senior Hong Kong-based executive with the bullion desk of a leading international bank.

Higher premiums are an indication of stronger demand as retailers compete to get quicker delivery for sales of jewelry or other gold products.

“Yes, we have had more customers visiting us since the crash this week,” said Alex Cheung, manager at Wo Shing Goldsmith, one of Hong Kong’s oldest gold jewelry retailers, which draws most of its clientele from mainland China. “Our sales are up by 20% to 30% compared to average sales in previous months.”

He said some potential customers are likely still holding back, waiting for a further fall in prices. The buying interest in pure gold products, which are called gold biscuits and mostly used for investments, has also shot up this week, he said.

Although Mr. Cheung said the positive sentiment around gold purchases was aided by China’s equity market selloff in late June and early July, he added those declines likely led to an increase in the number of customers who may have been selling their gold to meet margin requirements or carry forward their equity positions.

Other jewelers in Hong Kong echoed those comments.

A representative from Chow Tai Fook, the largest gold jewelry chain in Hong Kong, said customer traffic and sales of gold products have increased over the past few days and suggested the recent drop in gold prices has spurred locals and tourists from mainland China to buy gold jewelry.

“This week, we are selling twice more gold than we were last week,” said Jimmy Choi, assistant manager at Hong Kong’s Lukfook Jewellery, which is popular with tourists from the mainland.

“In the summer we sell a lot of gold, but this summer, we sold less,” said Mr. Choi. “This week, it has changed.”

Gold sales have also picked up in India despite a seasonal lull coinciding with a crop planting season when farmers deploy their savings into cultivation.

“Until now, the gold demand was very low because of the season,” said Rahul Gupta, managing director of P.P Jewellers, a leading jewelry retail chain in India. “Demand has picked up noticeably as the common man thinks prices have bottomed out.”

Market analysts suggest gold prices are likely to rise in a sustained manner only once the suspense over the timing and extent of a U.S. interest rate increase is out of the way. Higher interest rates would further buoy the dollar, which in turn makes dollar-priced commodities like gold more expensive for buyers using foreign currencies.

Meanwhile, appetite for gold coins from Australia, which ranks second behind China in gold output, began to heat up last month, said Ron Currie, sales and marketing director for the Perth Mint.

He said the mint recorded a 37% on-month jump in sales in June to 21,692 troy ounces, but sales in July already matched that level earlier this week and appear to be gaining momentum.

“There’s absolutely been some bargain hunting,” he said. “I think sentiment has now changed. Gold had been running between two very straight train tracks, and breaking out of that band has made people think about purchasing.”

Write to Biman Mukherji at biman.mukherji@wsj.com, Alice Kantor at alice.kantor@wsj.com and Rhiannon Hoyle at rhiannon.hoyle@wsj.com

Article source: http://www.marketwatch.com/story/golds-plunge-sparks-retail-demand-in-china-india-2015-07-22-64854120

Gold’s plunge sparks retail demand in China, India – MarketWatch

July 22, 2015 Posted by admin

HONG KONG–Gold’s plunge to five-year lows this week has prompted a swift rise in demand from jewelry retailers in China and India, the world’s top consumers of gold, leading to a doubling of premiums paid on physical gold.

At the same time, sales of gold coins from Australia’s biggest bullion mint have been rising sharply, likely thanks to some bargain-hunting.

The increase in demand is expected to provide a cushion to the battering that gold has taken this week, although it may not be enough to offset the bearish outlook on the yellow metal amid growing expectations of a rise in U.S. interest rates and a lack of safe haven demand. India, together with China, accounts for around half of the global demand.

Spot gold traded Wednesday at $1,094 an ounce, just above the more than five-year low touched Monday and off nearly 5% from a week ago. Prices for the precious metal, which peaked at nearly $1,900 in August 2011, have been under pressure since Federal Reserve Chairwoman Janet Yellen said late last week that a rise in U.S. interest rates is in the cards this year and China’s central bank reported much lower-than-expected gold reserves.

This week’s pickup in demand China is a welcome sign as interest had waned in recent months as investors flocked to the soaring stock market.

Until Chinese equity markets turned south in late June, the lack of demand meant gold was available at a small discount to international prices. But the premiums paid on the precious metal for immediate delivery rose to $2 a troy ounce by late June and are now quoted around $4 an ounce, said a senior Hong Kong-based executive with the bullion desk of a leading international bank.

Higher premiums are an indication of stronger demand as retailers compete to get quicker delivery for sales of jewelry or other gold products.

“Yes, we have had more customers visiting us since the crash this week,” said Alex Cheung, manager at Wo Shing Goldsmith, one of Hong Kong’s oldest gold jewelry retailers, which draws most of its clientele from mainland China. “Our sales are up by 20% to 30% compared to average sales in previous months.”

He said some potential customers are likely still holding back, waiting for a further fall in prices. The buying interest in pure gold products, which are called gold biscuits and mostly used for investments, has also shot up this week, he said.

Although Mr. Cheung said the positive sentiment around gold purchases was aided by China’s equity market selloff in late June and early July, he added those declines likely led to an increase in the number of customers who may have been selling their gold to meet margin requirements or carry forward their equity positions.

Other jewelers in Hong Kong echoed those comments.

A representative from Chow Tai Fook, the largest gold jewelry chain in Hong Kong, said customer traffic and sales of gold products have increased over the past few days and suggested the recent drop in gold prices has spurred locals and tourists from mainland China to buy gold jewelry.

“This week, we are selling twice more gold than we were last week,” said Jimmy Choi, assistant manager at Hong Kong’s Lukfook Jewellery, which is popular with tourists from the mainland.

“In the summer we sell a lot of gold, but this summer, we sold less,” said Mr. Choi. “This week, it has changed.”

Gold sales have also picked up in India despite a seasonal lull coinciding with a crop planting season when farmers deploy their savings into cultivation.

“Until now, the gold demand was very low because of the season,” said Rahul Gupta, managing director of P.P Jewellers, a leading jewelry retail chain in India. “Demand has picked up noticeably as the common man thinks prices have bottomed out.”

Market analysts suggest gold prices are likely to rise in a sustained manner only once the suspense over the timing and extent of a U.S. interest rate increase is out of the way. Higher interest rates would further buoy the dollar, which in turn makes dollar-priced commodities like gold more expensive for buyers using foreign currencies.

Meanwhile, appetite for gold coins from Australia, which ranks second behind China in gold output, began to heat up last month, said Ron Currie, sales and marketing director for the Perth Mint.

He said the mint recorded a 37% on-month jump in sales in June to 21,692 troy ounces, but sales in July already matched that level earlier this week and appear to be gaining momentum.

“There’s absolutely been some bargain hunting,” he said. “I think sentiment has now changed. Gold had been running between two very straight train tracks, and breaking out of that band has made people think about purchasing.”

Write to Biman Mukherji at biman.mukherji@wsj.com, Alice Kantor at alice.kantor@wsj.com and Rhiannon Hoyle at rhiannon.hoyle@wsj.com

Article source: http://www.marketwatch.com/story/golds-plunge-sparks-retail-demand-in-china-india-2015-07-22-64854120

After China Dumps Gold, Don’t Count on India to Come to the Rescue – VOA

July 21, 2015 Posted by admin

Blame poor rains or a lack of weddings, but Indians, for whom gold is the investment of choice, aren’t rushing to buy bullion after this week’s sharp sell-off.

India and China are the world’s top gold buyers and, after massive selling on the Shanghai Gold Exchange on Monday helped drive down gold prices by 4 percent to a 5-year low, traders hoped demand would perk up in India, or elsewhere in Asia.

The last big slide in gold prices – a 13 percent drop in just two consecutive trading days in April 2013 – prompted weeks of long queues of Indians outside gold showrooms.

Not this time. India’s gold appetite – it accounts for more than a fifth of global demand – remains sluggish, with only modest local premiums to the global spot benchmark.

“That’s really a bearish sign, when the main consuming region remains on the sidelines after such a price drop to a multi-year low,” Commerzbank senior oil analyst Carsten Fritsch told the Reuters Global Gold Forum on Tuesday.

“Who’s going to buy gold if not the Asians?”

Out of wedding season

As the gold price dropped on Monday to $1,088.05 an ounce, its lowest since March 2010, Indian jewelers sent text messages to clients encouraging them to buy gold and offering to cut by half the cost of making it into jewelry.

While the price slide sparked some interest, there has been no repeat of the 2013 buying frenzy. “This is not a festive or wedding season, so interest remains low,” said Kumar Jain, vice president of the Mumbai Jewellers Association.

This year’s Hindu calendar has fewer auspicious dates for weddings, a traditional time for buying and giving gold.

The Indian central bank’s inflation targeting efforts have helped bring price rises under control, removing one main reason for Indians to hold gold as a store of value. The rate of inflation has halved to 5.4 percent from double-digits at the end of 2013.

India spent a record $15.2 billion on gold imports in April-May 2013, with gold bars selling locally for more than $20 an ounce above the global spot price. That premium is now just around $1 an ounce.

“Many Indian consumers are not buying, thinking there’s still scope for downside in prices,” said Daman Prakash Rathod, a director at Chennai-based wholesaler MNC Bullion.

And weak monsoon rains mean many farmers from India’s rural areas, which make up nearly two-thirds of domestic gold demand, don’t now have the ready cash to buy gold, Rathod noted.

Morgan Stanley estimates Indian households own, directly or indirectly, around $1 trillion in gold, about the same as in bank fixed deposits, and against just $400 billion in shares – though low-cost stockbrokers are looking to use a 42 percent drop in gold prices over the past four years to lure investors into buying more shares.

Watching prices drop

The lackluster physical demand for gold is mirrored elsewhere across Asia, with premiums in Hong Kong up by just 10 cents from last week to 90 cents-$1.10 an ounce and those in Singapore stuck at around $1 for months, traders said.

“There was a bit of buying and then no more inquiries. Gold prices are dropping, dropping, dropping – so people don’t want to buy for the time being,” Ronald Leung, chief dealer at Lee Cheong Gold Dealers in Hong Kong, said on Tuesday.

Bullion prices generally have come under pressure from expectations of higher interest rates in the United States, which boosts the dollar and makes non-interest bearing assets such as gold less appealing.

China’s appetite for gold, too, has waned after it also imported record volumes in 2013. Fast-rising stock prices, a slowing economy and Beijing’s anti-corruption drive, which has deterred some from making conspicuous ‘luxury’ buys, have all diverted money away from bullion.

China revealed on Friday a 57 percent increase in its gold reserves from 2009, far less than the market had estimated.

And even if gold prices fall further – spot prices rose about 1 percent to $1,109 an ounce on Tuesday – there’s no guarantee that would encourage buyers.

“If gold falls below $1,000, would there still be interest in holding gold?” asked a Singapore-based trader.

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Gold Prices Fall to Five-Year Low in Asia Trading

July 20, 2015 Posted by admin

Gold Prices Fall to Five-Year Low in Asia Trading

The price of gold fell to its lowest level in five years in trading early Monday. For a time, gold was selling at less than 1,100 dollars an ounce on Asian markets.

Some traders are calling the price drop a “mini flash crash.” Thirty billion dollars in short selling took place within half an hour during what are known as “stop-loss” selloffs. Traders executed sell orders when gold prices reached targets set by investors.

Luke Chua is sales and operations manager at Bullion Star, a Singapore business that sells gold and other precious metals.

“In the physical market, this would not be possible because that would consume a whole lot of physical gold. But in the futures market, because it’s all digital as long as you find a buyer to bid for it, then that would be possible.”

The short selling reportedly began at the Singapore Gold Exchange. Gold trading also quickly increased on China’s Shanghai exchange. Financial news agencies reported on the sales in Shanghai.

A desire to sell gold appeared to have been worsened by thinking that concerns about the Greek economy have somewhat eased. There also appeared to be an easing of investors’ concerns about the Chinese stock markets.

Some observers were wondering about China’s possible involvement in the short-selling of gold Monday. China is the world’s largest producer of gold. On Friday, the country said its supplies had increased by 59 percent to 1,658 tons as of the end of June.

Trader Luke Chua in Singapore says that should have driven up the price.

“But that’s not what we’re seeing in the market these few days. And the reason for that is because, currently, the price levels that we’re seeing in the market, is heavily driven by the futures market and not the physical market.”

Some observers note China’s increase in gold reserves was smaller than expected. But they admit that does not fully explain the intense speculative trading early Monday morning.

Gold prices are now six percent lower compared to prices one year ago.

Metals traders say they expect gold prices to remain around the current level. They also could move still lower because of possible action by the United States Federal Reserve. The U.S. central bank is expected to increase interest rates later this year. That would lead many investors to take their money out of gold and other metals and to buy U.S. government bonds instead.

I’m Bob Doughty.

Steve Herman reported this story for VOA. George Grow adapted it for VOA Learning English. Mario Ritter was the editor.

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Words in This Story

 

flash – adj. relating to something that appears, moves or passes very quickly

short selling –n. a kind of trade in which an investor makes a profit by selling an asset at a higher price and buying it back at a lower price

precious – adj. worth a lot of money; valuable

consume – adj. to use; to destroy something with fire

digital – adj. relating to computer technology

reserves – n. supplies of something

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