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  Business   Low demand in Asia may pull down gold price

Low demand in Asia may pull down gold price

REUTERS
Published : Apr 27, 2016, 5:56 am IST
Updated : Apr 27, 2016, 5:56 am IST

Gold prices that hit a 13-month high in March are likely to fall back in the short term because of a slump in demand from key Asian consumers, GFMS analysts said in a report on Tuesday.

Gold prices that hit a 13-month high in March are likely to fall back in the short term because of a slump in demand from key Asian consumers, GFMS analysts said in a report on Tuesday.

Global gold demand tumbled by 24 per cent year-on-year to 781 tonnes in the first three months of the year, its weakest quarter in seven years, as buying from leading consumers India and China plummeted, GFMS said in the first-quarter update to its Gold Survey 2016.

 

That coincided with a sharp rally in prices, which posted their biggest quarterly increase in nearly 30 years. Prices peaked in February at their highest since February 2015.

“The rally so far in 2016 developed too rapidly in our view, and with poor demand from Asia we expect the gold price to ease sooner rather than later, particularly if fears about the global economy continue to abate,” GFMS said in the report.

Demand for the metal will improve later in the year, however, as lower prices attract Asian buyers back to the market, it said.

“This correction to comfortably below $1,200 will aid a recovery in demand from the east, and this will ensure that prices stay well above cyclical lows,” it said. “Thereafter, gold prices are set to resume their bull run (to) around $1,300 an ounce towards year-end.”

 

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