Gold crosses 29,000, yet fails to woo Chindians

As gold trades near its highest in a year on a wave of safe-haven buying, traditionally active buyers of physical gold in the major Asian markets have shown little interest so far.

Consumers in China and India tend to typically buy gold in jewellery form, swooping in to hunt bargains or if they are confident of a sustained rally.

A lack of interest from China and India — which together account for about 45 per cent of world gold demand — could put a dent on the metal’s biggest rally in years, though panic buying of gold coins and bars led by Western consumers could cushion the impact.

“We had a client call up this morning and order a million dollars of gold,” said Bron Suchecki, the manager of analysis and strategy at Australia’s Perth Mint, adding that the client was an individual investor and that much of the interest is from Western clients.

“We have had a really big pick up in the first couple of weeks of February,” he added.

“The question is whether the Western-fear money flow could outweigh the lack of love from India and China ”

Signs this week point to a pull back in demand in Asia immediately following the spike in prices, a bearish sign for Chinese demand when they are back in the market next week.

Dealers in India, the world’s second-biggest consumer, were offering a record discount of $40 an ounce to the global benchmark, with one Mumbai-based jeweller saying retail demand had “almost vanished.”

Prices in other major trading centres have also dropped. In Hong Kong, premiums fell to 80 cents to $1 an ounce, from 90 cents to $1.10 last week, against the global price. In Singapore, they have dropped to $1 from up to $1.20 last week.