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‘Upside potential’: World Gold Council counts on Asian buyers to curb price plunge

The trend reflects a ‘growing relevance’ of Asian markets, while US investors pull back on gold holdings due to higher rates, inflation

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The World Gold Council said Asian markets were a growing force in gold price discovery, while US investors have pulled back on the metal due to high interest rates and inflation. Photo: Reuters
Julie Zhang
Asian markets are a growing force in gold price discovery as the metal remains sensitive to heightened geopolitical concerns and abrupt shifts in investor sentiment, according to the World Gold Council.

Asian trading hours have been a key driver at gold price rebounds during the first half of the year, while the pullbacks tended to occur when US markets were open, according to the council’s global midyear outlook report published on July 1.

“It … showcased the growing relevance of Asian markets in gold price discovery,” the industry body’s analysts said in the report.

The global gold ETF flows tell the story, said Ray Jia, research head of Asia-Pacific ex‑India at the council. “In the US, higher yields and rate expectations amid sticky inflation have led investors to trim their gold ETF holdings.

“In Asian countries such as China, India and Japan, gold ETF demand was driven by other reasons including but not limited to geopolitical risks, local gold price strength, local currency weakness etc.,” Jia said.

The trend comes as emerging-market central banks, including China’s, have continued adding gold to diversify their reserve assets. China’s investment demand for gold in the first quarter surged 67 per cent from a year earlier, a separate report by the World Gold Council showed.

The gold price is expected to have upside potential in the second half of this year, even after dropping to around US$4,000 per ounce as of June 26 following a surge to 12 all‑time highs in late January amid the Middle East turmoil, the report said.

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