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Gold Kilobar Premiums in Asia Trend Upwards

By Koh Guan Ho & Lee Liang Le, Analysts, Kallanish Index Services

GOLD KILOBAR PREMIUMS IN ASIA TREND UPWARDS​

Since 2022, central banks have embarked on a path of incrementally raising interest rates in response to stubbornly high inflation, a trend that persisted into 2023 amid ongoing economic challenges. Despite gold prices being less directly influenced by demand and supply dynamics, heightened geopolitical tensions prompted both central banks and investors to seek refuge in safe-haven assets such as gold. Demand from central banks reached 1,037 tonnes in the preceding year, marking the second-highest record. This influx of demand played a pivotal role in maintaining elevated gold prices in the face of high interest rates.

In 2023, KIS daily gold kilobar premiums over spot averaged US$0.64/oz for Singapore, $1.16/oz for Hong Kong and $0.65/oz for Bangkok.* Notably, Hong Kong kilobar premiums consistently maintained a higher level than those in Singapore and Bangkok, which remained largely comparable.

Consumer demand (encompassing bar and coin investment as well as jewellery) traditionally has had an important influence on gold prices. This exhibited varied patterns across these three markets in 2023:

  • Singapore witnessed a decline in consumer demand, with gold purchases amounting to 12.5 tonnes, marking a decrease of 16% from 2022.
  • Hong Kong experienced a substantial surge in consumer demand, reaching 38.6 tonnes, reflecting a remarkable increase of 57% from 2022.
  • Thailand’s consumer demand grew to 42.1 tonnes, representing a notable uptick of 9% from 2022.

Average KIS Asia Gold Premiums over Spot (US$/oz) and Consumer Demand

Average KIS Asia Gold Premiums over Spot (US$/oz) and Consumer Demand​

Singapore’s comparatively lower consumer demand can be attributed to factors such as its smaller population size and unique consumer preferences. Despite declining consumer demand during the last nine months of 2023, gold premiums for loco Singapore have shown a consistent upward trajectory, mirroring those observed in Thailand’s market. This trend can be explained by increased central bank buying, with Singapore’s central bank emerging as the third-largest buyer of gold, having acquired 75 tonnes as of the third quarter of 2023. Data from the Bank of Thailand also suggests that since 2019, the Thai central bank had doubled the value of its reserves.

Hong Kong Gold Premiums and China’s Influence

In January 2024, KIS gold price premiums peaked across all three regions, with Singapore recording $1.01/oz, Hong Kong $3.27/oz, and Bangkok at $1.03/oz. The substantial increase in Hong Kong premiums, exceeding $2.00/oz, outpaced its counterparts in Singapore and Bangkok. This trend can be partly explained by the consistent and strategic efforts of the People’s Bank of China (PBoC) to fortify its gold reserves since November 2022, leveraging Hong Kong as a primary conduit for gold imports into China. By the end of 2023, the central bank had augmented its gold holdings by 225 tonnes, elevating its total reserves to 2,235 tonnes.

There was a notable upsurge in gold imports into China in December 2023, particularly via Hong Kong, with a remarkable increase of 36.8 tonnes from the preceding month. This surge in demand was primarily ascribed to the imminent Chinese New Year festivities, which commenced on February 10, where gold assumes profound cultural significance.

In terms of consumer demand, China imported a record high of 1,447 tonnes in 2023, valued at approximately US$90 billion. This heightened demand was largely fuelled by a weak yuan against the US dollar, the property market crisis and fears of a stock market sell-off. Given constraints on purchasing US dollars or US dollar-denominated products to hedge against the depreciating yuan, gold emerged as a strategic diversification option for many citizens.

Shanghai Gold Premium

Over the past year, the Shanghai gold price premium peaked at $122/oz in September 2023, marking an historic high. It averaged $29.12/oz for the year, however, representing approximately a 1.5% premium over London’s gold price. In January 2024, this premium had surged to an average of $47.59/oz, reflecting heightened demand.

Shanghai Gold Premium over Spot (US$/oz)

Shanghai Gold Premium over Spot (US$/oz)​

However, as the yuan displays signs of stabilisation and with local governments introducing market-friendly policies, forecasts suggest China’s demand for gold may slow down, growing at a more moderate pace this year.

* KIS daily gold price premiums reflect the mid-point of the average bid and ask premiums reported by market participants for each region. Access KIS daily gold prices for Asia at www.kallindex.com.

kallindex
SBMA KIS - LEE LIANG LE photo

LEE LIANG LE is an analyst at Kallanish Index Services, where she specialises in covering the gold market and compiling daily gold kilobar price premiums for Asia. Her background is in finance, with experience in various roles, including brokerage, electronic FX trading and macroeconomic research.

SBMA KIS - Koh Guan Ho Photo

KOH GUAN HO is an analyst at Kallanish Index Services, heading up its Asian operations. His main responsibilities include market engagement, research and compilation of the KIS daily gold kilobar price premiums for Asia. His background is in business management.

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Lee Jia Yi

OPERATIONS & ADMIN EXECUTIVE
Before joining SBMA, Jia Yi worked as an Admin & Reporting Officer in her previous role. She holds a Diploma in Business & Social Enterprise from Ngee Ann Polytechnic. Jia Yi is responsible for managing and maintaining physical and digital files in SBMA, supporting invoicing processes, reconciling receivables and payables, coordinating meetings and conferences. Additionally, she will provide support to the team and assist the Business Director in managing the Association’s office operations and general administrative activities.

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Emily Oh

OPERATIONS & ADMIN EXECUTIVE
Emily Oh is the Operations & Admin Executive, a seasoned professional who values teamwork and effective communication. She is skilled at adapting to new challenges and takes a proactive and resourceful approach to every task. Before joining SBMA, Emily had experience coordinating international travel arrangements and spearheading community initiatives. Her role at SBMA will be providing operational and administrative support for projects and other matters to the team.

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Clara Chang

MARKETING & COMMUNICATIONS EXECUTIVE
Clara Chang joins SBMA as the Marketing & Communications Executive, enriching the team with her extensive experience in content creation, social media management, and digital marketing. Prior to joining SBMA, Clara held the position of Marketing Executive at her previous job. She holds two bachelor’s degrees from the University at Buffalo, one in International Trade and another in Geographical Information Science. Her core duties will include maintaining the SBMA website, managing the quarterly Crucible newsletter, among other responsibilities.

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Mr John Levin

Global Metals
TD Securities
John Levin is the Head of Metal Sales & Trading – APAC at the Toronto Dominion Bank’s Singapore office. Prior to this role, he devoted seven years to leading precious metal sales for the ANZ banking group in his home country, Australia. Notably, from 2009 to 2011, John played a significant role on the management committee of the London Bullion Market Association while serving as the Head of Precious Metals Sales for HSBC Global Banking and Markets in the UK.

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Fabian Lew

MARKETING & COMMUNICATIONS OFFICER

Fabian was a Business Development and Marketing Associate before joining SBMA. He graduated from Singapore Management University with a Bachelor’s degree in Economics.

He has joined SBMA since February, 2022.

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Margaret Wong

BUSINESS DIRECTOR

Margaret Wong, Business Director at SBMA (Singapore Bullion Market Association), brought valuable experience from her previous role at the World Gold Council (WGC). Her tenure at WGC provided her with extensive exposure to the gold community in Singapore and the broader region. This background has been instrumental in establishing strong working relationships within the industry.

Margaret’s role at SBMA encompasses a diverse range of responsibilities. She oversees office management, business support processes, finance, and administrative functions essential for the smooth operation of the team and management committee. Additionally, Margaret handles membership matters, member communications, and addresses public inquiries related to SBMA.

One of Margaret’s key responsibilities is coordinating with the Event Management Company for SBMA’s prestigious annual event, the Asia Pacific Precious Metals Conference. This flagship conference plays a crucial role in the industry, making her involvement pivotal in its success.

Described as resourceful and self-motivated, Margaret Wong brings a wealth of skills and experience to her role at SBMA, ensuring efficient operations and effective engagement within the precious metals community in Singapore and beyond.

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Albert Cheng

Chief Executive Officer

Albert Cheng joined the World Gold Council in March 1993 as a Regional Manager, becoming Managing Director, Far East in 2003. He retired at the end of March 2015 and was subsequently named its Advisor. He has also been an International Advisor to the Shanghai Gold Exchange since 2002.

His marketing career began with Dentsu Young & Rubicam, Hong Kong in the early 80’s. He began gold marketing in July 1985 when he joined the Royal Canadian Mint as a Regional Manager for Southeast Asia.

He was appointed honorary CEO of SBMA in November 2015. He is responsible for the success and strategic development of SBMA, represents the interests of the Association, and is responsible for all the legal and regulatory aspects of the work of the Association. He is the primary contact for regulators and government bodies on bullion market development.

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Ms Pawan Nawawattanasub

CEO
YLG Bullion Singapore Pte Ltd

Pawan is the CEO of YLG Bullion Singapore and founder of YLG Bullion International. She has almost 40 years of experience in the jewellery industry and established YLG in Thailand in 2003. In 2012, she brought YLG to Singapore. She sits on the Board of Directors of the Thailand Gold Traders Association, the Thailand Futures Exchange’s Arbitration Committee, and the Rotary Bangkok committee. She holds a master’s degree in Political Science.

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Mr Shaokai Fan

Head of Asia-Pacific (ex China) and Global Head of Central Banks
World Gold Council
Shaokai Fan is the Global Head of Central Banks at the World Gold Council, responsible for advising governments on gold matters, and enhancing the gold market through engagement, dialogue, and thought leadership. He works directly with central banks and sovereign wealth funds on investment considerations. Prior to this position, Shaokai held multiple roles at Standard Chartered Bank, including Director for Asia Strategic Initiatives and Associate-Director for Public Sector coverage. Shaokai holds a Masters of Public Administration from Columbia University and the London School of Economics, and an undergraduate degree in finance and economics from New York University.

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Mr Alan Liew

Head of Bullion & Commodities Trading
United Overseas Bank Limited
Alan is Head of Bullion and Commodities Trading for Group Trading in Global Markets, United Overseas Bank (UOB). Alan joined UOB and started the bank’s commodities trading business in 2014, previously he spent eight years in Standard Chartered Bank (SCB) trading both precious and base metals. During his tenure at SCB, he obtained the SGE gold trader licence and was part of the pioneering team for the SGE business and the FX quantitative trading team. Prior to trading, he worked for Monetary Authority of Singapore in the Financial Risk Management Division. He holds a BSc (Hon) in Computer Science at National University of Singapore and a MSc in Financial Engineering at Nanyang Technological University.

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Mr Nikos Kavalis

Managing Director
Metals Focus Singapore Pte Ltd
Nikos Kavalis is a founding partner of Metals Focus. He has over 20 years of experience in precious metals, having previously worked for the Royal Bank of Scotland and GFMS. Since September 2019, Nikos has been based in Singapore, where he also runs the local subsidiary of Metals Focus.

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Mr Nuttapong Hirunyasiri

CEO
MTS Gold Global Trading Pte Ltd
Nuttapong Hirunyasiri is the CEO of MTS Gold Group, one of Thailand’s top 10 companies and top 3 bullion companies. He started MTS Gold Group’s first overseas office in Singapore and has been expanding the group business internationally. He focuses on product development and innovation for gold investment, with the aim of being a leader in providing the full suite of gold investment services in the ASEAN region.

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Mr Raman Walia

Executive Director, Head of Commodities Sales – APAC
JP Morgan Chase Bank N.A.

Raman is Executive Director and Head of Commodities Sales, APAC, for J.P. Morgan. He joined JPMorgan in 2008 in New York, moved to Singapore in 2011, and helped expand the precious metals business in the region. Raman has an MBA from Cornell University, and likes to travel in his spare time.

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Mr Andrew Clarke

Head of Brink’s Global Services
Brink’s Global Services Pte Ltd

Andrew Clarke is the Head of BGS (Brink’s Global Services) for Singapore, Indonesia, Malaysia and Brunei. He has held various leadership positions throughout his career in secure logistics and risk management with Brink’s, which started in Hong Kong in 2010. Andrew relocated to Singapore in 2018 to expand the precious metals line of business along with Brink’s portfolio of services and industries.

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Mr Kazuya Naoki

Head of Metals, Asia
ICBC Standard Bank Plc, Singapore Branch

Kazuya (Kaz) Naoki is the Head of Metals, Asia of ICBC Standard Bank in Singapore and is responsible for the precious & base metals sales and trading in the region. He joined Standard Bank Plc Tokyo Branch in 2008 and was relocated to its Singapore Branch in 2013 whose controlling stake was acquired by the Industrial and Commercial Bank of China in 2015. Prior to joining Standard Bank, Kaz spent 11 years focusing on commodity trading and risk management with Mitsui & Co in Tokyo, Sydney and London. Kaz has been serving on the SBMA Management Committee since 2016.

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Mr Vinh Nguyen

Head of Precious Metals, Asia
StoneX APAC Pte Ltd

Vinh Nguyen joined StoneX Group in Singapore at the beginning of 2008 and responsible for its APAC precious metals activities since 2019 until now.

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Mr KL Yap

General Manager, Singapore Refining Business Unit
Metalor Technologies (Singapore) Pte Ltd
KL YAP is the General Manager of Metalor Technologies (Singapore) Pte Ltd’s Singapore Refining Business Unit. He joined Metalor in 2013, initially in Refining Sales. In 2014, he became Refining Business Unit Manager, leading the development of a new precious metal refinery. KL was Vice Chairman of SBMA from 2017 to 2021, now serving as Chairman. With a degree in business commerce, finance, and marketing, he brings prior experience from refinery and heavy industries.