December 03, 2020

LBMA Asia Update 2020

Jeremy East, LBMA's Senior Advisor for Asia; Nicholas Frappell, ABC Bullion; Sunil Kashyap, Scotia Bank HKG; Albert Cheng, SBMA.

After a very challenging year for demand across all parts of Asia and Australasia, there are signs of optimism for demand in 2021. Jeremy highlighted that gold’s discount in China is narrowing, the recent strength of the RMB is making gold more attractive, the underlying economy is robust and so the indicators suggests that China will return to the international gold market in 2021.

Nicholas gave us a great overview of his technical analysis charts, insights from a refinery angle with falling demand from China and India offset by rising ETF and CME flows. He sees the key drivers for gold – a weaker US dollar and low real interest rates – remaining in place into next year. Albert gave us a whistle-stop recap of Singapore, Vietnam, Thailand, Indonesia and Japan.

Finally, Sunil shared some great insights from the India market; how the sharp rise in unemployment due to the pandemic lead to much selling of gold and this, in part, explained the local market seeing discounts of $50. Now, those discounts are lower, and in some brief cases positive. He also talked about the rise of gold retail loans, where individuals pledge their gold for a Rupee loan, and return at a later date with cash to buy the gold back. With stores closed, buying behaviour has changed: the younger generation increasingly buy gold via apps on their phones while the more sophisticated investors have started trading ETFs.

Looking to 2021, India will see the exciting launch of the International Bullion Exchange.

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