SINGAPORE, Dec 20: Asia’s physical buying picked up after gold dropped to its lowest in nearly four months earlier this week, while some market participants were concerned about a potential supply shortfall next week as refineries close for holidays.
Spot gold dropped to $1,661.01 an ounce on Tuesday, its lowest since Aug. 31, but has recovered some ground since then to trade at $1,667.41 on Thursday.
The price slide triggered some buying interest, but the uncertainty in market direction kept many on the sidelines, especially as the year end draws near.
‘Physical buying has picked up, and we may see supply a little tight next week as refineries will have a shortened production week,’ said a Singapore-based dealer.
Premium on gold bars in Singapore stood at $1-$1.10 an ounce above London prices, she added.
In Hong Kong, dealers quoted the premiums in the range of 90 cents to $1.40 an ounce, the highest since end of August, up 10 cents from a week earlier.
In Japan, gold discount narrowed to as low as 30 cents, from 50 cents a week earlier, as supply decreased on slower supply from refineries, but the year-end holiday could lead to less demand from industrial users, a Tokyo-based trader said.
The weaker yen inflated local gold prices, which did little to inspire buyers. The dollar had gained about half a percent against the yen this week, and more than 1 percent so far this month.
In India, the world’s largest buyer of the precious metal, benchmark gold on the Multi Commodity Exchange fell to a two-week low of 30,760 rupees per 10 grams on Wednesday, attracting bargain hunters, traders said.
WEEK AHEAD
Market participants will keep a close eye on the progress in the U.S. Budget talks to seek a direction in prices.
An agreement between the White House and Republicans could relieve investors of worries that the world’s top economy was on the edge of another recession, triggering a risk rally and dampen gold’s safe-haven appeal.
Meanwhile, any spike in physical demand could cause a supply shortage as refineries close for the holidays. (agencies)
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