with dip Global gold pricesThe demand for the yellow metal from eastern countries is increasing as Western investors are dumping bullion.
This comes as high interest rates reduce the attractiveness of gold as an investment, and mean that large quantities of the metal are withdrawn from vaults in financial centers such as New York heading east to meet the demand in the gold market in Shanghai or the Grand Bazaar in Istanbul.
The data collected by Bloomberg and viewed by Al Arabiya.net showed that large quantities of gold bought by Turkey and Saudi Arabia in the Middle East, since last April, amounted to 62 tons and 20 tons, respectively.
The metal’s circulation around the world is part of a gold market cycle that has repeated for decades: when investors pull back and prices fall, Asian buying rises and precious metals flow east – helping to set a floor for the price of gold during times of weakness, and when gold eventually rises once more, much of it comes back. To languish in bank vaults under the streets of New York, London and Zurich.
Since peaking in March, gold prices have fallen 18% as massive interest rate increases by the Federal Reserve caused a mass liquidation by financial investors.
gold quantities
More than 527 tons of gold have flowed from the vaults of New York and London, which support the two largest Western markets, since the end of April.
Meanwhile, shipments to large Asian gold consumers such as China, whose imports hit a 4-year high in August, are increasing.
And while a lot of gold heads east, it’s still not enough to meet demand. Gold has been trading in Dubai, Istanbul or the Shanghai Gold Exchange at a multi-year premium over the London benchmark in recent weeks, according to MKS PAMP, indicating that buying is outpacing imports.
In India, silver is seeing a large insurance premium. The spread recently rose to $1, more than three times the usual level, according to consultancy Metals Focus Ltd.