Business | Markets
Jewellers buy gold after price hits 12-week low
Domestic demand in India has picked up the last few days because of weaker prices ahead of the Akshaya Tritiya festival due on May 7.
- Reuters
- Published: 00:45 May 1, 2008
Singapore: Jewellery makers from India to Indonesia have stepped up purchases after bullion dived to its lowest level in three months, pushing up premiums for gold bars in Southeast Asia.
Spot gold was at $874.80/$875.80 an ounce at 1348 GMT, from $873.55/$874.75 late in New York on Tuesday and up from a three-month low of $862.30 an ounce it touched earlier in the day
The price drop spurred buying from jewellers and bargain hunters, which helped push up premiums for gold bars to 75 US cents an ounce to the spot London prices in Singapore, from 70 cents last week.
Dealers saw buying from India, the world's largest gold consumer ahead of a religious festival in May, as well as demand from jewellers in Thailand, Vietnam and Indonesia, which is Southeast Asia's main buyer.
"The price is considered cheap now, that's why people buy back," said said Leo Hadi Loe, a consultant with Jewellery Indonesia, a Jakarta-based firm promoting gold in Indonesia. "When the price was above $900, many people sold their jewellery to be melted. The feeling is that the gold price will even fall further."
A combination of profit taking and recently, oil's drop from its record peak and a surging dollar ahead of an interest rates decision by the US Federal Reserves, have knocked gold off record highs.
"Indonesia is buying physical, and we've been selling gold to jewellery makers and other bullion dealers. India is also in the market. That's why premiums are quite high," said a dealer in Singapore.
Domestic demand in India has picked up the last few days because of weaker prices ahead of the Akshaya Tritiya festival due on May 7, an auspicious day when purchases of precious metals are believed to bring lasting prosperity.
Premiums for gold bars were steady at between 20 and 30 cents in Hong Kong, with dealers reporting higher demand from China and Southeast Asia earlier this week.
In Tokyo, selling from retail investors has slowed down, and some bullion houses offered gold bars at a premium of 25 cents to the spot London prices, compared with a discount of 25 cents last week.
"Except for some demand from the industrial sector, I don't see much interest from the general public. But selling from investors has declined," said a dealer in Tokyo.
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