China Gold Trading Sees New 10-Week High "But Winding Down" for New Year as Emerging-Market Slump Continues
Monday, 1/27/2014 13:43
The PRICE of GOLD jumped and then slipped 1.1% from a new 10-week high at the start of China's trade Moday morning, falling back to $1264 per ounce as the sell-off in emerging-market stocks and currencies wore on.
India's Sensex lost another 2%, as did Hong Kong stocks.
Turkey's Lira fell to fresh all-time lows as the central bank called an emergency meeting, due to end with a press statement at midnight tonight.
"We expect the current risk-off wave to be short-lived," reckons Dr.Edel Tully at Swiss investment and London bullion bank UBS.
Moreover, "With much of Asia and in particular China winding down for Lunar New Year celebrations, physical [gold] demand this week will be very lacking. And the [US Fed] meeting this week should confirm a further $10 billion tapering measure by the Fed."
Despite climbing to a record for full-year 2013, net gold imports to China through Hong Kong again missed the 100-tonne level seen by some analysts as critical to prices in December, new data showed Monday.
"Bolstering" 2013's record-high Chinese
gold bullion demand, said a note last week from Societe Generale analysts, "[was] dramatic growth in the number of wholesale showrooms opening. These outlets have had to build stocks."
"[China's] banks and securities firms," adds a new note from Citibank today, "are now offering everything from wealth management products backed by gold, to savings accounts that pay physical gold rather than cash interest."
Noting Beijing's ongoing "liberalization" of gold imports – which local reports now say includes import licenses for two foreign banks, HSBC and ANZ – Citi "expect the expansion of gold products to continue in 2014, supported by strong demand from savers with few investment alternatives."
The
Wall Street Journal Asia yesterday said that China's ICBC, the world's biggest bank by assets, "is close to acquiring a controlling [60%] stake" in Standard Bank's UK-based bullion, commodities and FX division for some $700 million according to "sources".
Meantime in India, the former No.1 consumer of physical gold, finance minister Chidambaram told tax officials in New Delhi today that he is "confident" of reviewing the country's effective gold import ban "by the end of this [fiscal] year" at end-March.
India goes to the polls for national elections in May.
But contradicting Chidambaram in an interview published Sunday by the
Hindu Business Line, "Our Current Account Deficit is negative...India cannot afford its gold intoxication," said Reserve Bank of India deputy governor K.C.Chakrabarty.
"Stop giving/taking gold as dowry and stop giving gold to temples," he urged households.
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