Chinese Premium Swells On Rising Gold Demand

 

BEIJING (Scrap Monster): The Chinese demand for gold has surged this week, as bankers and retailers began to accumulate the yellow metal ahead of the anticipated rise in gold demand ahead of the Lunar New Year holidays. The unprecedented surge in demand has pushed up local gold premiums in the country to almost double when matched with the previous week levels.

 

The premium for gold on Shanghai Gold Exchange rose to $7 per troy ounce during the week. This is almost double when compared with the premiums of $4 per Oz late last month. According to Exchange sources, gold buying remained consistently stronger this week. The sudden rise in demand has provided much-needed support to international gold prices, holding them above the $1,200 per Oz.

 

According to traders, the premiums and volumes have risen sharply in comparison with the previous month. The strong purchases are likely to continue through Lunar New Year in February. The rise in demand has come despite higher prices of gold and this augurs well for the market, traders noted. The physical demand from China may spur gold to higher levels. If not, it will ensure that the yellow metal has limited downside from its current levels.

 

Meantime, domestic prices in India are reportedly trading at a discount to global price due to extremely weak demand and adequate supplies. Premiums in Singapore and Hong Kong remained flat, whereas those in Tokyo were at a discount.