Shanghai Gold, Silver Volumes Surge To Records and Premiums Rise As Night Trading Begins
Friday, 12 July 2013
Gold is marginally lower today, but is up 3.8% this week and on track for its biggest weekly gain since October 2011. There has been a realisation that ultra loose monetary policies are set to continue reigniting bullion’s appeal as an important diversification.
Indian gold demand fell sharply and was down 70% in June from May. The Indian government’s taxes and capital controls have had the desired effect in the short term but at what cost and how sustainable will their measures be?
China continues to be the elephant in the room which is being ignored by the gold bears and Chinese gold demand continues at record levels and is compensating for the sharp fall in Indian demand.
Very robust demand in China is seen in the fact that Hong Kong jewellers and banks are having difficulty meeting demand and the rising premiums and record volumes on the Shanghai Gold Exchange (SGE).
Premiums on gold futures on the SGE yesterday closed at a $12.90 per ounce over COMEX spot – COMEX at $1,283.30/oz and SGE at $1,296.30/oz. Overnight the premium on the SGE rose sharply and is now at $35.94 – COMEX at $1,275.30 and SGE at $1,311.14/oz (see ‘Gold Futures’ in table below).