Asian Gold Buyers Sustain High Demand Amid Geopolitical and Economic Uncertainty

Asian Gold Buyers Maintain Interest Despite High Prices Amid Geopolitical Uncertainty

At the recent precious metals conference in Singapore, participants expressed optimism about the future of gold, noting strong demand across the region despite its high prices driven by geopolitical and macroeconomic uncertainties. The price of gold has surged by 16% since mid-February, reaching over $2,300 an ounce.

Rhona O’Connell, head of market analysis at StoneX Financial Ltd., commented, “The shift in sentiment has led to higher prices, attracting buyers back. It’s not just the price but also the underlying factors—uncertainty and risk.”

Political Influence on Gold Market

Political risk, especially with over 40 countries holding elections this year, was a key topic at the Asia Pacific Precious Metals Conference. Concerns about the declining state of major economies, particularly China, and weakening local currencies are making gold more attractive, despite its rising cost.

China remains the top retail market in Asia and a significant price driver, rivaling London and New York. With a strong tradition of using gold as a savings tool, China is the largest consumer and producer of gold. Current instability in its property and stock markets is further increasing demand.

Ruth Crowell, CEO of the London Bullion Market Association (LBMA), remarked, “China is the main force in price discovery right now. Asian demand for gold will continue to grow.”

The LBMA is expanding in Asia, gaining new members, including banks, traders, and refineries, according to Crowell.

Demand Across Asia

In India, demand dipped between March and April but rebounded during the festival season, with jewelers reporting higher sales compared to last year, according to the World Gold Council.

In smaller markets like Vietnam, demand remains strong, with the Vietnam Gold Traders Association expecting a 10% year-on-year increase in the first half of the year, said Vice Chairman Huynh Trung Khanh.

In Japan, despite the weakening yen making gold more expensive, purchases remain steady. Bruce Ikemizu, chief director at the Japanese Bullion Market Association, noted, “We are seeing more buying at these historically high levels. This is unprecedented.”

Nikos Kavalis, managing director at consultancy Metals Focus Ltd., highlighted that supply from scrap metal has tightened, which is unusual in a high-price environment, indicating consumers’ reluctance to sell their gold.

Future Outlook

However, the bullish outlook may moderate in the longer term if the geopolitical landscape stabilizes after this year’s extensive election cycle.

“This could reduce one element of support unless new regimes cause further concern,” said O’Connell from StoneX.