Gold Performance India Holds Near Three-Month Peak
Gold performance India lingered near an over three-month peak of 53,113 rupees per 10 grams last August 4. Demand for the precious yellow metal weakened slightly over the last few weeks as major buyers stayed in a wait-and-see mode while the market set up for a correction.
Dealers offered huge discounts of up to $14 an ounce to encourage movement, a discount applied over official domestic prices that already include a 15% import levy and a 3% sales levy. Despite the softer gold performance India saw last week, the India International Jewelry Show managed to land huge orders. Organizers and jewelers hoped the festival season this year would bring a strong boost.
China and Hong Kong Premiums Shift
Chinese premiums dropped to $5-$9 an ounce over international spot prices, down from a range of $4 to $11 an ounce the previous week.
Bernard Sin, regional director of Greater China at MKS PAMP, said tension between Taipei and Beijing is greatly affecting gold performance across Asia, including gold performance India tracks closely against. He noted that nobody wants to import large volumes while so much remains uncertain, especially regarding China-US relations.
The People’s Bank of China controls how much gold enters the country through quotas issued to commercial banks. Hong Kong dealers, meanwhile, offer gold at premiums up to 2% over the benchmark.
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Vincent Tie of Silver Bullion in Singapore said, “We could see rising premiums for physical gold and silver for the rest of 2022.” Tie added that while this could dampen demand in the short term, consumers of these precious metals would likely overlook it if a repeat of the 2020 price rally occurs.
Premiums in Singapore ranged between $1.50 and $2.30. Brian Lan, managing director of GoldSilver Central, said wholesalers slightly increased their purchases in anticipation of upcoming festivals. He added that wholesalers will also need to ramp up production and expand their range as the world reopens, economies improve, and tourists return.
US Treasury Yields Lift Global Gold Prices
Gold prices rose slightly Friday as US Treasury yields dropped, putting the metal on track for four straight weeks of gains as investors digested recent US inflation data. This shift in global sentiment carried through to gold performance India recorded through the same period.
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Spot gold climbed 0.5% to $1,798.86 an ounce as of 1800 GMT, heading toward a weekly increase of more than 1%. US gold futures also settled up 0.5% at $1,815.15.
Bart Melek of TD Securities said the gold market is currently seeing short covering, supported by lower yields. US Treasury yields fell after a volatile week as investors weighed whether a slowdown in inflation could ease the pace of Federal Reserve rate hikes.
Data released earlier in the week showed inflation had mellowed slightly, prompting market participants to scale back expectations of an aggressive Fed rate hike. Still, hawkish Fed commentary has kept gold from breaking above the $1,800 level.
Melek said the metal’s rally, sparked by cooler CPI figures, stalled as markets expect inflation to remain a major issue. Fed speakers have shown little enthusiasm and have suggested they can’t afford to ease their fight against inflation.
Gold performance tends to improve in low-interest environments, since the metal doesn’t yield any interest of its own.
“Rising risk appetite, seen through surging stocks and bond yields, has so far prevented gold from making a decisive challenge at major resistance over the $1,800 level,” said Ole Hanson, an analyst at Saxo Bank.
Copper and Industrial Metals Diverge from Gold
While gold performance improved last week, it was a different story for copper. Copper prices fell Friday as the US dollar strengthened and Chinese bank lending declined. Still, copper prices may improve, with some predicting a rise toward $3, as easing US inflation appears to be powering a broader shift toward riskier assets.
Beyond copper, prices for other industrial metals fell but still managed gains of 1-5% this week after inflation data suggested the Federal Reserve may need fewer rate hikes, easing broader economic concerns.
The London Metal Exchange (LME) showed copper at $8,103 per ton, down 0.9% as of 1600 GMT. Copper, a primary material for power and construction, has risen 16% from a low last July amid the global economic slowdown, though it still shows a 25% loss from its peak last March.
New bank lending in China fell by twice the expected amount in July, according to data released Friday — a bad sign for metal demand, since China ranks among the world’s biggest metal consumers. Industrial production in Europe, however, grew up to three times more than analysts expected last June.
Silver Outshines Gold
Silver has recovered and improved, and it’s now projected to outperform gold. This highly speculative metal is drawing money from investors, trend traders, and speculators alike into silver and other precious metals. The September silver futures contract was pegged at $20.70 an ounce, higher than its mid-July level.
Overall, gold performance India and global markets alike continue to track closely with shifting interest rate expectations, geopolitical tension, and the relative strength of the US dollar — factors likely to keep shaping prices through the rest of 2022.
