Lofty Prices Tarnish Gold’s Lustre in Top Asian Retail Hubs

SEATTLE (Scrap Monster): On a recent evening in April, only three or four people browsed among the several gold jewellery booths in a plaza in Beijing's high-end Wangfujing shopping district and all left without buying anything.

"I'm just taking a look. I do not consider buying right now because prices are too high at the moment," said one of the people, a woman who declined to give her name when asked by Reuters, but said she was 50 years old. She said she might consider buying if gold prices fell to around 300 to 400 yuan a gram, from nearly 600 yuan ($87) a gram at the time.

Shoppers leaving empty-handed complaining of high prices are becoming a more common sight at gold stores in China and India, respectively the world's largest and second-largest retail gold consumers.

With gold prices just off their records of 2020, pushed higher by safe-haven investors seeking solace amid recession fears and banking crises in the U.S. and Europe, retail buyers are eschewing rings, earrings and necklaces.

But without that retail support, there are concerns the rising gold prices will stall, especially as central banks have raised interest rates to their highest in years, reducing the allure of holding non-yielding bullion.

"To sustain a rally in global prices, physical demand from India and China is absolutely critical. Without this, there would be a natural cap on how high prices could potentially rise," said Prithviraj Kothari, the President of the India Bullion and Jewellers Association Ltd (IBJA).

Global gold prices surged to $2,072.19 an ounce on Thursday, only cents away from the record set on Aug. 7, 2020. Prices have risen 12% so far in 2023.

In India, local gold prices soared to a record 61,490 rupees ($752) per 10 grams on Thursday.

Courtesy: www.indiatimes.com