Mumbai: The fall in the price of gold to nearly a nine-month low lured jewelry shoppers in Asia to look for good deals.
After a year of sluggish demand, retailers are buying more of the precious metal to cater to people like Sima B, a 35-year-old housewife who has ventured to Mumbai’s Zafiri Bazaar for new bracelets after months of putting them off.
She said, “Prices have decreased a little, and public concerns about the virus have eased.”
Sima has joined others in India and Malaysia who stock up for weddings and investments. South Korean retail investors are stockpiling bullion, while Chinese demand has driven up sales during the Lunar New Year.
Demand for physical gold may halt the decline in prices hit by rising bond yields and outflows from bullion-backed ETFs.
When financial investors are not buying, “the physical market becomes increasingly important in setting the floor for prices,” said Suki Cooper, a precious metals analyst at Standard Chartered Bank. “The gold price floor is starting to look well tolerated.”
The price of spot gold fell 0.9% to $ 1729.60 an ounce on Monday. Earlier this month, it fell below $ 1,700 to the lowest since June, leading to more buying from consumers who were hampered by prices hitting a record $ 2,075.47 in August.
Jewelers in India see momentum continuing into the auspicious day to buy gold at Akshaya Tretia in May. Kumar Jane, owner of UT Zaveri store in Mumbai, expects his sales to nearly double in January-March compared to the previous year and is optimistic about the next quarter as well.
He said: “We have seen the best demand in the last month since the virus said that fear appeared in March of last year, as customers went out to buy at weddings thinking that prices would rise even more.”
The reduction in import duties has also made the precious metal cheaper in India, which imports almost all of the gold it consumes. Initial estimates show that gold purchases jumped to the highest levels since late 2019 in February.
In China, gold jewelry consumption is set to grow by 28% in 2021, with most of the recovery occurring in the first quarter as the post-Covid recovery has run out and prices increased later in the year, Metals Focus said in an earlier report. Month.
Sales of jewelry at major urban retail stores more than doubled during the Lunar New Year holidays compared to last year, according to Zhang Yongtao, general secretary of the China Gold Association.
This pushed the local market to trade at a significant premium since mid-January, which has not happened since February 2020, Stanchart’s Cooper said.
Bullion dealers say premiums on kilobars have also increased in Singapore, Hong Kong and Thailand since February.
Joshua Rotbart, Founder and Managing Partner at J Rotbart & Co. “This is most likely because the scrap market has stopped after the drop in gold prices, which means that refiners are struggling to obtain the materials needed to produce enough gold bars.”
“After I said that there is no real pressure in the market and certainly the insurance premiums are not at all their highest.”