Asia's Gold Demand Is Expected to Remain High This Year

 

Observations show that Asian gold buyers are interested in buying gold despite the metal's high price, which is affected by macroeconomic and geopolitical risks. Attendees of a precious metals symposium this week in Singapore expressed optimism for the future of bullion, pointing to the high demand for it around the region. This follows a record rise that has seen prices soar beyond $2,300 an ounce, with gains of 16% since mid-February.

 

On the fringes of the conference, Rhona O'Connell, head of market analysis at StoneX Financial Ltd., said, "It is evident that the shift in sentiment has resulted in higher prices, which has ultimately drawn people back in." But it's not just about the cost; risk and uncertainty are what determine the cost as well.

 

The Gold Business's Political Impact

Political risk was a major issue during the Asia Pacific Precious Metals Conference, since elections are being held in over 40 nations this year.

 

Concerns about the state of the major economies, particularly China, and the declining value of local currencies are contributing to the growing appeal of gold, even if the majority of buyers consider the metal to be more expensive.

 

 

 

China remains Asia's largest retail market, driven primarily by the financial hubs of New York and London.

 

China is the world's largest producer and consumer of gold, and the country has a long tradition of using it as a savings instrument. The local real estate and stock markets' current volatility is driving up demand even more.

 

The London Bullion Market Association's CEO, Ruth Crowell, said, "It's probably safe to say that the Chinese market is currently the largest driver of price discovery. Asia's demand for gold will only increase.

 

According to Crowell, the LBMA is growing significantly in number of new members, which includes banks, dealers, and good delivery refineries, as it looks to further establish its foothold in Asia.

 

According to the World Gold Council, demand in India experienced a decline from March to April but has since increased as jewellers report greater sales throughout the festival season than they did the year before.

 

Demand is still strong in smaller markets like Vietnam, where Huynh Trung Khanh, vice chairman of the Vietnam Gold Traders Association, predicted that consumption would increase by 10% year over year in the first half of the year.

 

Despite the weaker yen making bullion more expensive for buyers, bullion purchases in Japan are constant. The Japanese Bullion Market Association's chief director, Bruce Ikemizu, stated: "At this historic high level, we are seeing selling, of course, but even more buying." This has never happened before.

According to managing director of consulting Metals Focus Ltd. Nikos Kavalis, supply from scrap metal in the region has also tightened, which is unusual in this high-price market and suggests that consumers are loath to part with their gold.

 

Longer term, though, there's a good reason to temper this optimistic view. When the protracted election cycle of this year ends, the geopolitical environment might stabilise.

 

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