(Reuters)- Gold’s decline to the three-year lows last week is showing a weak reaction from Asian consumers and isn’t repeating the buying rage that was experienced in April as India’s controls on trade of the yellow metal and reintroduced worries around China’s growing demand.
The world’s two top gold consumers, India and China markets play a big role in the international gold prices. In April, the decline in gold prices triggered a high wave of buying gold coins and jewelry all over Asia.
While physical demand is dropping to go on with the flow of investment from the exchange-traded gold funds, prices are predicted to move under more pressure. Spot gold is down around 25% this year.
On Tuesday Shanghai shares fell more than 6% at one point to the lowest since early 2009 among worries that Chinese central bank heading towards restrictions in credit growth and may hit the China’s economic growth.
Since last Monday, gold has dropped 8%, around $100; to reach $1,268.89 (The lowest since September 2010) after the Federal Reserve announced its strategy to lower down its $85 billion monthly asset purchase program.
Dealers in Hong Kong were estimating up to $2.50 an ounce for gold kilo bars. Hong Kong, which sells mainly to buyers from China, had premiums increased to $6 last month.
Premiums in Singapore dropped to $2 from a high of $7 last month while in Tokyo saw a moderate push up because of the tight supplies.
A trade body head said in India premiums increased from $5 to $7 an ounce as against $2-$3 last week as supplies were also tight because of import restrictions.