Buoyant Chinese gold dash lifts Asian bar premiums to peak

Gold  |  2013-05-16 06:16:53   |   By

The gold bar premiums in Hong Kong and Singapore hit record highs as five-day losing streak of gold sparked renewed buying interests mainly in China.

SINGAPORE (Scrap Monster) :  The gold bar premiums in Hong Kong and Singapore hit record highs as five-day losing streak of gold sparked renewed buying interests mainly in China. The swelling Chinese demand boosted gold exports taking the Tokyo premiums to the highest level in two years.

The bullion had been intermittently rising and falling ever since it fell to nadir mid-April. The five-day losing streak ended up with gold sinking below $1,400 per ounce. The steep drop in prices fuelled another round of frenzy buying that lead to severe supply constraints.

The premiums for gold bars climbed to peak in Hong Kong and Singapore. Gold bars sold for premiums as high as $5 per ounce over spot LME prices, mounting nearly 70% week-on-week. The stock of physical gold was deficient to meet the increased Chinese demand. The premiums in Singapore were as high as $3.50 per ounce. The premiums in Tokyo also jumped higher as traders were seen boosting the exports to Hong Kong.

Hong Kong continues to be China’s main source of gold imports. According to statistics released by the Hong Kong Census and Statistics Department, the net gold flows from Hong Kong to China sky rocketed to 223.519 tonnes in March, rising by 130% from the net flow of 97.106 tonnes during February.

According to World Gold Council (WGC), even when investors in the West flocked away from the precious metal, the demand for gold bars and gold jewelry were going through the roof in Asian countries especially China.