Column-Soft China and India may undermine gold's rally hopes: Russell
By Clyde Russell
LAUNCESTON, Australia (Reuters) — The spot price of gold has climbed to a six-month high, buoyed by hopes that monetary tightening in western countries is largely done and dusted.
While signs that the U.S. Federal Reserve and other western central banks have finished increasing interest rates are a definite positive for the precious metal, they're not the only factor.
China and India make up more than 50% of the physical gold market, giving the two Asian heavyweights a major influence on the likely price trajectory.
In local currency terms gold is close to record highs in both China and India, and there are signs that this may be starting to impact on retail demand in both countries.
Spot gold reached a six-month high of $2,017.82 an ounce on Monday and is up 11.5% since the recent low of $1,809.50 on Oct. 6.
In Indian rupees, gold reached 168,145 rupees an ounce on Monday, close to its all-time high of 169,401 rupees from May 4. It has gained 11.8% since the recent low on Oct. 6 of 150,401 rupees.
While India's gold demand has been solid so far in 2023, matching strength in the domestic economy, it appears that some momentum may be coming out of the market.
The discounts offered by dealers off official domestic prices, inclusive of 15% import and 3% sales levies, doubled to $6 an ounce last week amid reports of lacklustre demand for the upcoming wedding season.
It's a similar story in China, with the premium over spot prices declining to $20 to $40 an ounce last week from the $43 to $58 previously.
Another proxy for China's demand is its imports from Hong Kong, which fell for a second consecutive month in October.
China's net imports from Hong Kong slid 23% to 26.793 metric tons in October, compared
Read more on investing.com
