Gold bar premiums soar in Asia on tight supply

Last Updated: Tue, Apr 23, 2013 05:34 hrs

Singapore: Premiums for gold bars rallied to their highest since late 2008 in Singapore and touched an 18-month peak in Hong Kong after a spate of physical buying led to supply constraints, dealers said on Tuesday.

Purchases of gold bars, coins, nuggets and other products picked up pace after a brutal selloff drove down spot gold prices to their weakest in more than two years at around $1321 last week. A rise of more than $100 since then has failed to dent buyers' appetite for the metal.

"I think we can say there's no immediate gold coming into Hong Kong for the time being," said Ronald Leung, chief dealer at Lee Cheong Gold Dealers in Hong Kong.

"If you have time to wait, maybe they can deliver it to you in one or two weeks."

Hong Kong dealers were charging gold bars at premiums of $3 an ounce to the spot London prices, their highest since October 2011. The former British colony is the centre for bullion trading in East Asia and China's main source for gold imports..

Gold bars were quoted as high as $3 an ounce in Singapore - a level last seen in October 2008, with dealers witnessing steady buying interest from local buyers, Indonesia as well as India, the world's largest consumer.

India celebrates Akshaya Tritiya, a key gold-buying festival, next month, while the wedding season will continue till early June. Indian parents give gold jewellery to their daughters at weddings as a custom.

Singapore and Hong Kong dealers get their supply from Japan and Europe, where suppliers were also struggling to cope with demand from Asia.

But in Tokyo, premiums slipped to 50 to 75 cents an ounce to the spot London prices from $1 last week as buyers paused for breath.

"The market has come down a little bit. Last week, there was a huge demand for gold from the general public, but we don't see much this week," a dealer in Tokyo said.

Gold, which has dropped about 15 percent this year, has been caught in a tug-of-war between physical buyers seeking bargains and wary investors cutting exposure to it on worries about central bank sales and prospects of easing inflation.

Investors were still licking their wounds after gold posted its biggest-ever daily loss in dollar terms last Monday, taking many ardent gold investors and bulls by surprise.