Jul 17, 2009
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Asia: Gold premiums at 8-month high, Indonesia stocks up

Jul 17, 2009

SINGAPORE, July 17 (Reuters) - Premiums for gold bars jumped to their strongest in eight months as Indonesian jewellers replenished stocks before the fasting month, while main consumer India snapped up bullion at lower levels, dealers said on Friday 17 July.

Gold bars were quoted at a premium for the first time since April in Tokyo on the back of purchases by Japanese retail investors earlier this week, when gold traded near $900 before rising to a two-week high above $940 on inflation worries.

Spot XAU= was quoted at $936.15 an ounce, barely changed from New York's notional levels, and was within sight of Wednesday (15 July)'s peak of $941.95. Gold was around 6 percent below an 11-month high above $1,000 an ounce hit in February.

"For the medium term, I am still pretty neutral on gold and it's still pretty much in a sideways consolidation around $900 to $1,000," said Adrian Koh, analyst at Phillip Futures in Singapore.

"I think the $940 to $945 is sort of acting as a near-term resistance," said Koh, referring to gold's recent highs. "And it's sort of caught between movements in oil and the dollar."

Gold bars were offered at premiums as high as 90 cents an ounce to the spot London price in Singapore, the highest since November, and higher than 50 cents last week.

Steady demand from Indonesia, India and Thailand helped the premiums defy recent gains in gold prices. Cash gold and premiums usually move in an opposite direction.

"Physical demand is quite good. We're selling gold bars at 70 to 90 cents premiums. It's expensive. Indonesia is able to take more because its physical stocks have dried up," said a dealer in Singapore.

"Indonesia has been buying before the Muslim festival. There's also some buying from India, especially when the price was around $920," he said.

Jewellers in Indonesia, the world's most populous Muslim nation, are restocking before the month-long Ramadan fasting month in August that culminates with the Eid al-Fitr festival, when demand for jewellery picks up.

Fewer weddings take place in India during the monsoon season but dealers noted buying on dips before a series of festivals often resumes at the end of August.

Gold jewellery is the most common gift during religious events in India and forms an essential part of the dowry basket.

In Hong Kong, premiums for gold bars barely changed at 30 to 50 cents an ounce to the spot London price, while in Tokyo, bullion was offered at a premium of 25 cents to $1 versus a discount of 25 cents last week.

"There's been steady demand from the investment sector, and the supply of gold bars seems to be tight right now," said a physical dealer in Tokyo.

(By Lewa Pardomuan. Editing by Ben Tan)

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