Chinese gold buying means price floor to Standard Chartered

By Debarati Roy and Nicholas Larkin
Bloomberg News
Thursday, November 6, 2014

The cheapest gold in four years is proving irresistible for shoppers in China and India, where rebounding demand may signal an end to the longest price slump in more than a decade.

Purchases in Asia will help support prices that are headed for the first two-year decline since 2000, Standard Chartered Plc said. While surging equities and tame inflation have eroded gold's appeal as a hedge, sending bullion tumbling to $1,137.94 an ounce this week, prices are nearing the lows forecast by banks from Citigroup Inc. to Goldman Sachs Group Inc.

China supplanted India as the world's largest buyer last year, when the metal plunged 28 percent. Jewelry and bullion are viewed in both countries as a store of value and are popular as gifts. China's gold imports from Hong Kong in September were the highest in five months. Indian jewelers are forecasting a surge in fourth-quarter sales.

"There is a floor around $1,100 set by Chinese retail demand," Paul Horsnell, head of commodities research at Standard Chartered in London, said by e-mail on Nov. 5. "Physical demand indicators out of China and India are firming." ...

... For the remainder of the report:

http://www.bloomberg.com/news/2014-11-07/china-gold-buying-means-price-f...