The physical premium for gold in Shanghai has been steadily increasing over the past week in China as buying ahead of the lunar New Year increases.
The Shanghai premium for gold has increased to $6 per ounce over the spot price on one-kg bars, sources told FastMarkets on Friday.
Banks and retailers are said to be stocking up for the Chinese New Year festival, an auspicious time for consumers to buy gold, which in turn has pushed up the local premium.
“Whereas physical gold premiums in India have declined somewhat again of late, they remain at $5-6 per troy ounce on the Shanghai Gold Exchange, which points to robust demand for gold in China,” Commerzbank said in a note.
Total Shanghai Gold Exchange withdrawals for 2014 totalled 2102.36 tonnes, according to data released by the exchange this week – 86.61 tonnes were withdrawn over the last week-and-a-half of the year.
While the figure suggests that Chinese gold demand was once again strong, it was 95 tonnes below the 2013 total of 2,197 tonnes.
SGE withdrawals, while not an official indicator of Chinese demand, are used as a barometer for the amount of metal being both imported and sold throughout China.
In Mumbai, premiums have been slowly moving lower for several weeks as the wedding season came to a close and market participants continued to digest changes to import restrictions.
The Mumbai premium for gold has slipped to $3 over spot from highs of around $8 in December.
Imports were surprisingly slow following the abolition of the 80:20 rule in India and after three straight months of extremely high volumes coming into the country. But while imports remain sluggish, robust demand for jewellery remains intact, sources close to the matter indicated.
Indian gold imports in December were an estimated 30-35 tonnes following the high imports in the two preceding months, Commerzbank reported earlier this week.
“This roughly tallies with information provided by the minister of commerce, who said that 39 tonnes of gold had been imported in December and seven tonnes had already been imported in January,” the bank added.
Official statistics for December are due later this month.
Elsewhere, the Hong Kong premium was up slightly at $1.50, as was the Singapore rate at $1.50, while Dubai remained at $1, other sources said.
(Editing by Mark Shaw)
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