Gold was available at a rarely seen discount of as much as $4 per ounce in China on Friday in extremely volatile market conditions after the UK’s Brexit was confirmed.
On the day the UK voted to split from the EU, sending shockwaves across markets and prompting Prime Minister David Cameron to resign, the discount on 99.99-percent purity gold kilobars reached $3-4 per ounce – its widest since FastMarkets launched its gold premiums report in 2015.
“There was a swing to a $3-4 discount today – it’s a crazy day for gold and for us,” a local trader said.
The main reason for the dramatic change is the delayed reaction to volatile moves in the international gold price compared with the local Chinese market, sources in China noted.
Spot gold soared to a two-year high of $1,359 per ounce, up $100 or around eight percent on the previous close of $1,259. In contrast, on the Shanghai Gold Exchange, the metal rose five percent to 284 yuan per gram on Friday from the previous close of 268 yuan.
“The Chinese gold price didn’t rise as quickly or as much as the London price due to response lag,” a second trader in Shanghai said.
But the discount on physical metal in China is likely to be short-lived, market participants predicted, because the country is a net importer of metal.
“Such wide discounts will probably only last one or two trading days – we may see premiums very soon,” a third trader said, adding that premiums are normal conditions for a net importing country.
(Editing by Mark Shaw)
The post Rarely seen gold discount appears in China on Brexit day appeared first on The Bullion Desk.
Read More
Source: Bullion Desk News
