Asia is experiencing a significant surge in gold demand despite the precious metal trading near record highs, industry officials report. Investors are flocking to gold as a hedge against geopolitical and economic uncertainty, driving a regional gold rush.
Spot gold is currently trading at just over $2,300 per ounce, marking a 12% increase year-to-date and sitting only about 6% below the all-time high it reached last month. This surge in demand is being fueled by a combination of factors, including a decline in confidence in other investment options such as real estate and equities.
“When the macro-economic backdrop returns to normal, when real estate and equities are more interesting, I think that price sensitivity will return,” said Ruth Crowell, chief executive of the London Bullion Market Association, in an interview with Reuters.
In Japan, sentiment towards gold remains bullish despite the high prices. Bruce Ikemizu, chief director of the Japan Bullion Market Association, noted that Japanese investors continue to favor gold as a safe-haven asset.
Chinese investors, facing issues like currency devaluation, a prolonged real estate downturn, and ongoing trade tensions, are also turning to gold. China’s purchases of gold coins and bars surged 27% in the first quarter of this year, reflecting a strong domestic demand for the precious metal.
“The trend in the market has been that if the consumer wants to buy gold, they will. The price doesn’t matter,” said Albert Cheng, CEO of the Singapore Bullion Market Association, during the Asia Pacific Precious Metals Conference.
Across Asia, younger investors are increasingly seeing gold as a valuable asset. In Thailand, gold stores have seen queues form whenever there are headlines about rising prices, according to Nuttapong Hirunyasiri, CEO of MTS Gold Group. Similarly, in Vietnam, investors are stocking up on gold despite domestic prices being significantly higher than global prices.
However, not all countries in the region are experiencing the same level of demand. India, the world’s second-largest gold consumer, and Australia are showing sensitivity to the high prices. Indian gold prices have traded at a discount to international prices for five consecutive weeks, indicating subdued demand. The country’s gold imports are projected to drop by nearly 20% in 2024 as consumers opt to exchange old jewelry for new items rather than making fresh purchases.
The Perth Mint in Australia reported a 30% decline in gold product sales in May compared to the previous month, further highlighting the price sensitivity in some markets.
As geopolitical and economic uncertainties persist, the allure of gold as a stable investment continues to captivate Asian investors, even as the metal trades near historical highs. This sustained demand underscores gold’s enduring status as a trusted store of value amid global instability.