3 Reasons Gold Prices Are SKYROCKETING Despite Record Highs (1 Will Shock You)

Gold demand is surging in Asia despite record prices. China’s economic woes and upcoming elections across the region are driving safe-haven buying. Even high costs can’t deter Asian consumers, with Vietnam demand expected to jump 10% this year.

CONTENTS: 3 Reasons Gold Prices Are SKYROCKETING

• Gold Up on Risk and Uncertainty
• China Drives Asian Gold Demand
• Asia Buoyant on Gold Despite Costs

Participants at a precious metals conference in Singapore this week expressed optimism about bullion’s future, noting that demand in the region remains robust.

This sentiment persists even after a significant 16% price surge since mid-February, pushing prices above $2,300 an ounce. Asian retail gold buyers continue to show strong interest in purchasing more gold despite the high prices, driven by geopolitical and macroeconomic uncertainties.

Rhona O’Connell, head of market analysis at StoneX Financial Ltd., remarked at the conference that the shift in sentiment has led to higher prices, which in turn has attracted more buyers. She emphasized that the reaction is not solely to the rising prices but also to the underlying causes of the increase, namely uncertainty and risk.

With over 40 countries holding elections this year, political risk was a key topic at the Asia Pacific Precious Metals Conference. Concerns about the deteriorating conditions of major economies, especially China, and the decline in local currencies are further enhancing gold’s attractiveness, despite higher costs for buyers. China, a dominant retail market in Asia, is now challenging financial centers like London and New York in influencing gold prices.

Gold has long been a traditional savings instrument in China, which is the world’s largest consumer and producer of the metal. Current instability in China’s property and stock markets is boosting this trend.

Ruth Crowell, Chief Executive Officer of the London Bullion Market Association (LBMA), noted that China is “probably the biggest driving force in price discovery right now,” and predicted that the demand for gold in Asia will continue to grow. She also highlighted the LBMA’s expanding presence in Asia, marked by significant growth in new members such as banks, traders, and good delivery refineries.

In other parts of Asia, demand for gold in India softened between March and April, but it has picked up again as jewelers report higher festival season sales compared to the previous year, according to the World Gold Council. In smaller markets like Vietnam, demand remains strong, with consumption expected to grow by 10% year-on-year in the first half, as noted by Huynh Trung Khanh, vice chairman of the Vietnam Gold Traders Association.

In Japan, gold purchases are resilient despite the weakening yen making bullion more expensive. Bruce Ikemizu, chief director at the Japanese Bullion Market Association, remarked that although there is some selling, the level of buying at historical high prices is unprecedented.

Nikos Kavalis, managing director at consultancy Metals Focus Ltd., pointed out that supply from scrap metal in the region has tightened, which is unusual in this high price environment. This indicates that consumers are reluctant to part with their gold. However, he cautioned that the bullish sentiment might need tempering as geopolitical stability could return after this year’s extensive election cycle.

Rhona O’Connell of StoneX noted that this potential stabilization could remove one support factor for gold prices, unless the new regimes post-elections cause further concerns.