Page 28 - Bullion World Volume 5 Issue 1 January 2025

Bullion World | Volume 5 | Issue 01 | January 2025

Physical kilobar premiums in Asia trended downwards acquisitions in November as prices retreated below
for most of 2024 as gold prices embarked on a bullish $2,600/oz.
rally in March, achieving 40 new all-time highs and
increasing approximately 30% YTD. The record-breaking A $616/oz rise in average monthly gold prices over
streak was driven by a combination of factors, including the year dampened demand for newly minted kilobars,
lower interest rates and expectations of further rate contributing to steep declines in ask premiums from
cuts, geopolitical tensions in Ukraine and Middle East, March to October. Over this 8-month period, ask
and robust central bank purchases, particularly from premiums fell US$0.90/oz (-45.6%) in Singapore,
China and India. The customary seasonal dip in gold US$1.47/oz (-56.9%) in Hong Kong and US$0.87/oz
consumption in April was compounded by elevated gold (-43.9%) in Bangkok, underscoring the widespread
prices, softening demand and driving premiums lower. impact of price sensitivity across key Asian markets. As
gold prices pulled back in November, there was renewed
In response, the People’s Bank of China (PBoC) buying interest in Asian markets, driving a significant
paused gold purchases for its reserves in April after recovery in premiums and reversing much of the year’s
18 consecutive months of buying, only resuming declines.

KIS (Ask) Premiums for Recirculated Kilobars in Asia

Premiums for recirculated kilobars also provide valuable anticipation of the Thai digital wallet program, aimed at
insights for demand. In Singapore, prices remained stimulating the economy through cash payments, and
relatively stable, while Hong Kong and Bangkok saw also by investor enthusiasm seeking to capitalise on
rising premiums as gold prices fell, indicating increased price momentum amid rate cut expectations and gold’s
buying. November marked a surge in Hong Kong safe-haven appeal.
premiums, coinciding with the PBoC's resumption of gold
purchases. Looking ahead, the kilobar premium increases across
these Asian markets which began in November are
Thailand showed robust Q3 demand, with consumption expected to continue through February, spurred by
reaching 14.5 tonnes - the highest growth (+15%) typical inventory buildup ahead of the Lunar New Year
among ASEAN countries. This was partly driven by festivities.

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