Buyers in Asian markets were reluctant to continue purchasing gold as it reached a new record high last week, opting to cash out and wait for deeper discounts. In India, sellers were offering discounts on gold bullion of over $65 per ounce, with local dealers preparing for regulatory changes, while in China, discounted prices reached their lowest point in 2 years.
Asian Markets Cashed out During Recent Gold Rally
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Record Gold Highs Pushed Asian Markets Into Selling, Waiting for a Price Drop
The recent gold price rally, which led the precious metal to new record highs last week, was received by Asian markets as an opportunity for sellers to unload gold waiting for higher discounts down the road. According to local reports, India and China, two countries with the highest gold consumption in the world, followed this behavior.
In India, sellers offered discounts of up to $65 per ounce over domestic prices, one of the highest in over 28 months, preparing for an upcoming change in the regulatory framework governing gold imports. However, despite these discounts, buyers were still not purchasing, expecting the market to fall further.
“ Gold prices are in deep discounts, but jewelers are holding their fire, hoping for an even steeper price drop with a potential import duty cut in the budget,” an Indian dealer told Business Recorder.
In China, discounts reached their highest level in more than two years, with dealers offering each ounce at $6 less than international spot prices. Bernard Sin, regional director of Greater China at MKS PAMP, a precious metal trading group, stated that his rally threw “a curveball” at the physical buying trends in China.
“Some believe that if gold prices continue to rally, a discount of $15 could become a reality, tempered by the typical seasonal slowdown in demand during the summer months,” he stressed.
However, analysts expect gold prices to continue rising until the year’s end. JPMorgan predicted that gold could reach $2,500 per ounce in Q4, driven by anticipated Federal Reserve rate cuts beginning in September.
What do you think about the evolution of the gold market in Asia? Tell us in the comments section below.
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