Chinese demand lifts gold ornament prices
The Indian consumer will have to pay more for gold ornaments not only because the metal is becoming costlier but also because overseas suppliers have recently raised premiums.
By Ram Sahgal & Manu Balachandran, ET Bureau | Updated:
MUMBAI: The Indian consumer will have to pay more for gold ornaments not only because the metal is becoming costlier but also because overseas suppliers have recently raised premiums to cater for rising rising chinese demand and jet fuel prices.
An official at a bullion branch of a leading state-owned bank said suppliers increased premiums this month by as much as 75 cents to a dollar an ounce (31.10 gram) to meet a sharp rise in Chinese demand.
A leading Scotiabank official, the largest supplier of gold to domestic jewellers, said a hike in jet fuel prices had forced the bank to raise premiums marginally.
"Chinese demand has been relentless," said the government bank official. "They've (the Chinese) put pressure on supply which is why premiums have been raised to $1.5-2 an ounce from $1-1.5 this month."
The bank charges a commission of 30-50 cents an ounce above the supplier premiums, which comprise packing, insurance and transport charges.
According to Rajan Venkatesh, MD (bullion), ScotiaMocatta, a division of Scotiabank, premiums on gold were raised "marginally" by 20-30 cents an ounce to adjust for higher aviation fuel costs. Gold is moved mainly by the air route.
In line with the crude oil price rise, international jet fuel prices have increased from $918.5 a kilolitre in March to $1020.66 in April and to $1061.14 a kilolitre in May.
Gold has been rising annually since the past eleven years. The metal has gained 21% to Rs 22,593 per 10 gm over the past year on account of a falling dollar and more recently because of the Eurozone debt crisis and rising inflation in em-erging markets like China and India. Gold moves inversely to the dollar and is used as a hedge against inflation.
World Gold Council (WGC), a body funded by the world's leading gold miners, observed in its gold demand trends for the first quarter of 2011 that Chinese demand was being driven by its population's cultural affinity to the metal, monetary tightening to curb inflationary expectations, a positive view on gold by China's central bank and movement of capital from real estate to other avenues.
"Today, China is the second largest gold consuming market in the world. In 2010, gold demand grew by 32% despite a concurrent 25% rise in the annual average local currency gold price.
For the first time, annual gold demand (jewellery, investment and technology combined) surpassed the 700-tonne mark."
Bankers said premiums were influenced by demand from India and China, the world's largest gold buyers.
At present, they said, demand from China was higher than that from India, which imported 958 tonne last year.
According to WGC, Indian demand for gold jewellery at 206.2 tonne accounted for 37% of the global total in the first quarter of the current year.
An official at a bullion branch of a leading state-owned bank said suppliers increased premiums this month by as much as 75 cents to a dollar an ounce (31.10 gram) to meet a sharp rise in Chinese demand.
A leading Scotiabank official, the largest supplier of gold to domestic jewellers, said a hike in jet fuel prices had forced the bank to raise premiums marginally.
"Chinese demand has been relentless," said the government bank official. "They've (the Chinese) put pressure on supply which is why premiums have been raised to $1.5-2 an ounce from $1-1.5 this month."
The bank charges a commission of 30-50 cents an ounce above the supplier premiums, which comprise packing, insurance and transport charges.
According to Rajan Venkatesh, MD (bullion), ScotiaMocatta, a division of Scotiabank, premiums on gold were raised "marginally" by 20-30 cents an ounce to adjust for higher aviation fuel costs. Gold is moved mainly by the air route.
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In line with the crude oil price rise, international jet fuel prices have increased from $918.5 a kilolitre in March to $1020.66 in April and to $1061.14 a kilolitre in May.
Gold has been rising annually since the past eleven years. The metal has gained 21% to Rs 22,593 per 10 gm over the past year on account of a falling dollar and more recently because of the Eurozone debt crisis and rising inflation in em-erging markets like China and India. Gold moves inversely to the dollar and is used as a hedge against inflation.
World Gold Council (WGC), a body funded by the world's leading gold miners, observed in its gold demand trends for the first quarter of 2011 that Chinese demand was being driven by its population's cultural affinity to the metal, monetary tightening to curb inflationary expectations, a positive view on gold by China's central bank and movement of capital from real estate to other avenues.
"Today, China is the second largest gold consuming market in the world. In 2010, gold demand grew by 32% despite a concurrent 25% rise in the annual average local currency gold price.
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For the first time, annual gold demand (jewellery, investment and technology combined) surpassed the 700-tonne mark."
Bankers said premiums were influenced by demand from India and China, the world's largest gold buyers.
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At present, they said, demand from China was higher than that from India, which imported 958 tonne last year.
According to WGC, Indian demand for gold jewellery at 206.2 tonne accounted for 37% of the global total in the first quarter of the current year.
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