- Average weekly premiums of gold kilobars across Asia showed signs of recovery this week despite a lower weekly average premium
- Spot gold clinched another record high at US$2,570/oz during Asian trading today
- The Chinese market continues to see weak demand for wholesale gold and Shanghai-London gold price continues to trade at a discount
- For the week ending September 13, 2024, physical gold kilobar premiums averaged at US$0.14/oz and US$0.58/oz, for loco Singapore and Hong Kong respectively. Physical gold kilobar stood at a discount of US$-0.09/oz for loco Bangkok.
- In Singapore and Hong Kong, weekly average premiums for gold kilobars dropped significantly — down by US$0.11/oz (-43.3%) and US$0.03/oz (-4.9%) respectively compared to last week. In Bangkok, discounts narrowed slightly by US$0.02/oz (+17.9%). However, a recovery trend was observed as local premiums consistently rose across all three markets for this week. Singapore saw its premium rise from US$0.11/oz on Monday to US$0.16/oz on Friday, while Hong Kong’s premium climbed from US$0.55/oz to US$0.65/oz. In Bangkok, discounts moved slightly upward, from US$0.10/oz to US$0.09/oz by the end of the week.
- The Shanghai gold kilobar hit a discount of US$6.32/oz as of Thursday, September 12 — down from a discount of US$5.32/oz earlier in the week. This remains far below the year-to-date average premium of US$27.05/oz, underscoring the continued weak demand due to persistent high gold price. For almost a month now, Shanghai's physical gold kilobars have traded at a discount, with the Shanghai-London price gap averaging at a discount of US$2.33/oz for August.
- The trade data for the Shanghai Au99.99 contract saw strong volumes at the start of this week, at 11,718 kg to 8,876kg on Thursday, maintaining a daily average trade volume of 8,787kg for this week.
- Gold withdrawals from the Shanghai Gold Exchange in August totalled 102 tonnes, reflecting a 14% increase from July. However, year-on-year, withdrawals plummeted by 37%, pointing to softer demand. August, typically a strong month for wholesale gold as jewellers stock up for September’s jewellery fairs and national holiday sales in October saw diminished buying interest due to record-high gold prices impacting jewellery consumption.
- The Shanghai Gold Benchmark PM (SHAUPM) closed at an all-time high on Friday, reaching RMB 583.19/g, up from RMB 568.62/g at the start of the week.
- Chinese policymakers are weighing an 80 basis points (bps) rate cut on outstanding mortgages, which total $5.3 trillion. This move aims to reduce borrowing costs for homeowners and could potentially boost gold jewellery consumption in the last quarter of the year. However, consumer demand for gold remains highly price-sensitive, and the trajectory of gold demand will largely depend on price movements.
- The People’s Bank of China (PBoC), reported no change to its gold reserves for the month of August, marking the fourth straight month without new purchases from the world’s largest gold consumer.
- This week, gold kilobars in India were trading at a discount. By Thursday, September 12, 2024, the discount stood at ₹1283.21 per 10g (~US$47.52/oz), down from a discount of ₹639.76 per 10g (~US$23.71/oz) on Monday. Meanwhile, premiums in Istanbul saw a rise, increasing from US$15.59/oz on Monday to US$42.08/oz by Thursday, September 12.
- This week’s economic data has shifted the global gold market. The European Central Bank (ECB) announced its second rate cut in three months, citing slowing inflation and economic growth. While this move was anticipated, the ECB provided no clear guidance for future cuts. In the US, inflation data came in slightly higher than expected, with the Consumer Price Index (CPI) rising 0.28% in August, above the forecasted 0.2%. The Producer Price Index (PPI) also exceeded expectations, increasing by 0.2%, compared to forecasts of 0.1%. Despite these slight increases, the overall trend still points to slowing inflation. However, this data has lowered market expectations for a 50 bps rate cut from the Federal Reserve, with investors now anticipating a more modest 25 bps cut.
- Following these economic updates, gold prices surged to a new all-time high, closing at US$2,558/oz yesterday. Prices continued to climb during Asian trading today, reaching another record of US$2,570/oz. Currently, gold is fluctuating between US$2,565/oz and US$2,570/oz, as the market awaits the London and US trading sessions.
- Looking ahead, investors are closely watching the Federal Reserve's interest rate decision on Wednesday, September 18, 2024. As of September 13, the market is pricing in a 59% chance of a 25 bps rate cut and a 41% chance of a 50 bps reduction.
* KIS gold price premiums reflect the mid-point of the average bid and ask premiums over spot reported by market participants for each location.
To receive daily updates on gold price premiums for key Asian markets visit www.kallindex.com
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