Gold News

Gold Prices Steady at New Record Highs as Shanghai Premium Jumps, India's Demand Drops

GOLD PRICES steadied on Monday, holding close to last week's new all-time highs in all major currencies as private-sector demand in China – the precious metal's No.1 consumer market – drove the incentive for new bullion imports into Shanghai up to the highest in a month, writes Atsuko Whitehouse at BullionVault.
Heading for a fresh record high in Euro terms at Monday's 3pm London benchmarking auction, the spot gold price in US Dollars rose by 0.5% to $2175 per Troy ounce after dipping on Friday from last week's new intraday gold price high of $2222.
Gold on the Shanghai Gold Exchange had earlier edged up 0.1% in price overnight to ¥512 per gram, just ¥2 below the all-time high recorded at last Thursday's benchmark for China's wholesale market.
Previously averaging around $8 per ounce, that put the Shanghai premium – effectively the incentive offered to importers buying gold abroad and flying it into China – at the highest level in 4 weeks at $42 per ounce, up from last week's average of $22. 
Chart of Shanghai gold price vs. London, US Dollar equivalent premium. Source: BullionVault
Historically, most emerging markets have seen price-sensitive gold demand among private households, tending to reduce new purchases when prices rise.
But this latest rise in gold prices "hasn't tarnished Chinese gold appetite," says one local trader to Reuters, and younger savers are reported to have become a big driving force in China's world-leading gold demand amid declines in the stock market, real estate, and cash interest rates in recent years.
Recovering by almost 1/10th from early February's 5-year low, the Chinese stock market  edged 0.5% lower on Monday, and global equities also dipped after last the EuroStoxx600 index recorded its 9th straight week of rising prices and all 3 major US indices also set fresh all-time highs.
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China's housing slump continued in February, data published by the National Bureau of Statistics says, as the price of new homes declined for the 8th consecutive month.
The Chinese central bank this month left its benchmark lending rate unchanged at record lows following the biggest-ever reduction in February. 
"China's monetary policy has ample room and rich policy tool reserves, and there is still room for cutting the reserve requirement ratio," said Xuan Changneng, a deputy governor of the People's Bank of China (PBOC), at a press conference in Beijing last week.
In contrast to China, gold demand in India – the No.2 bullion consumer nation – has fallen hard as prices have risen, with the domestic gold price hitting a fresh all-time high of 66,943 Rupees per 10 grams inclusive of the subcontinent's heavy tax-and-import-duty costs.
Local dealers last week cut their offer prices to the deepest discount in a year at the equivalent of $38 per Troy ounce.
The UK gold price in Pounds per Troy ounce today steadied around Friday's new record high London benchmark price of £1722, while wholesale bullion for European investors crept towards yet another new high above €2008.
The price of silver, which finds nearly 60% of its annual demand from industrial uses, rose 0.2% to $24.68 per ounce, paring last week's fall of nearly 4% after hitting a 3-month high of $25.88 last Thursday.

Atsuko Whitehouse is the Head of the Japanese Market at BullionVault and the Editor of Japanese GoldNews.

See all articles by Atsuko Whitehouse here.

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