Aug 25, 2009
Indian jewellers buy bullion; premiums hardly moved
Aug 25, 2009
SINGAPORE (Reuters) - Jewellers in India bought some quantity of gold bars following a drop in prices, while purchases from the electronics sector cut the discount in Japan, dealers said on Tuesday 25 August.
Investment demand was lacklustre as consumers waited for gold to revisit recent lows. Indonesia, the world's most populous Muslim nation, was on the sidelines as jewellers turned to local inventories to meet demand ahead of a religious festival.
Gold added $2.40 an ounce on Tuesday 25 August to $943.80 an ounce, having hit an intraday low of $940.15. Gold rose to a 1-week high of $957.65 on Friday 21 August but was well below an 11-month high above $1,000 struck in February.
"I think (India) is buying on dips. It's not that much but demand from the jewellery sector has picked up," said Dick Poon, manager of precious metals at Heraus in Hong Kong.
India, which accounted for more than 20 percent of global demand for gold jewellery in 2008, is celebrating Ganesh Chathurthi, the first in a series of festivals which normally revive the country's gold physical offtake.
Weddings usually take place during the festive season, when parents give gold jewellery to their daughters for financial security. The festive season peaks in October with the Hindu festival of light, or Deepavali.
Purchases from India kept premiums for gold bars steady at 70 U.S. cents an ounce to spot London prices in Singapore, where demand from traditional consumers such as Indonesia, Vietnam and Thailand was muted.
"I am so sad because Indonesia is so quiet. I think they are using their own stocks because demand has not been great. Vietnam sells high, buys low. That's about it," said a dealer in Singapore. "There's not much physical-related trading."
Demand for gold jewellery normally rises in Indonesia during the Ramadan fasting month in August which culminates with the Eid al-Fitr celebration.
Premiums for gold bars were unchanged at 30 cents to spot London prices in Hong Kong, with dealers expecting consumers to return to the market only if gold dipped to around $920 -- a low seen in mid-July.
"I think the real buying should be around $920-$930, and selling should be at $955 to $960 areas," said Ellison Chu, manager of precious metals at Standard Bank Asia in Hong Kong, referring to the highs seen earlier this month.
"The market is still in range trading," he said.
Gold bars were on par with the spot London prices in Tokyo, having been offered at a discount of 50 U.S. cents last week, as the electronics sector stocked up. On the other hand, investors waited for higher prices, said dealers.
"I think most market participants will be looking towards the upside now but buyers will definitely hope prices will come down," said Adrian Koh, analyst at Phillip Futures in Singapore.
"I still think the dollar's going to be the major factor here and continued weakness in the greenback may push gold prices higher towards the previous resistance around $970."
The yen headed higher on Tuesday 25 August as share markets fell and investor interest in higher-yielding currencies ebbed, while currencies took in their stride news that Federal Reserve chief Ben Bernanke would be reappointed.
By Lewa Pardomuan
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