Borrowing to Trade Gold a 'Hot Topic' in China as Shanghai Premium Leaps
Friday, 4/25/2025 16:16
The PRICE of GOLD BULLION fell on Friday in London, making only its 3rd weekly loss of 2025's four months to date but trading 6.4% beneath Tuesday's fresh record high of $3500 per ounce as prices in China signalled surging demand from the precious metal's No.1 buyers amid reports of a speculative frenzy fuelled by consumer borrowing.
Prices in gold No.2 India, in contrast, showed the weakest level of demand against domestic supplies in perhaps a decade, hitting an $80 per Troy ounce discount to London quotes when adjusted for the country's bullion import duty and sales tax according to news-wire Reuters.
Following this week's
trade-war and Fed-firing gold spike to $3500, bullion prices have "run up into some levels where we don't think it's a particularly timely place to be putting more capital to work," reckons strategist Rob Sluymer at Canadian bank RBC's wealth management division.
"Technically," agrees Swiss bullion refining and finance group MKS Pamp's Nicky Shiels, looking at the price charts, "gold has broken a super bullish & aggressive uptrend channel, so it needs to find its footing."
Prices in Shanghai today made the lowest close in Yuan terms in more than a week, dropping below ¥786 per gram from Tuesday's new all-time high of ¥830.
But in Dollar equivalent terms, that put the premium for gold delivered in Shanghai rather than London at nearly $65 per Troy ounce, the biggest incentive for new bullion imports into China since September 2023's all-time highs above $100.
"Against the backdrop of a weakening US Dollar and trade policy uncertainty triggering safe-haven demand, gold prices at home and abroad have hit new highs in recent days and fluctuated at high levels," says financial news-site the Securities Times, part of Bejiing's
People's Daily.
Amid strong trading volumes on both the Shanghai Gold Exchange and the SHFE futures market, "Gold ETFs have been favored by investors," STCN goes on, with China's 4 largest such products attracting inflows equal to $440 million yesterday alone.
"Don't fall into the trap of 'chasing the rise and selling the fall'," urges the Shenzhen Business Daily, repeating this week's
warnings against "risky" gold trading from the Chinese authorities and reporting how, on Chinese social media platforms, "taking out loans to speculate in gold has become a hot topic.
"There are two main sources...bank consumer loans [or] maxing out credit cards."
Back in London, and down 0.9% at Friday's 3pm benchmarking auction from before the Easter holidays, the price of gold in US Dollar fixed today around $3265 per Troy ounce.
That still marked its 2nd highest ever week-end finish in London behind Thursday 17 April's record $3305.
Euro gold prices meantime lost 1.5% from Easter weekend at €2866 while the UK Pound price dropped 1.3% to £2461.
US stock markets slipped at Friday's New York opening, trimming this week's lower-tariffs and no-Fed-firing rebound to 4.6% on the S&P500 index.
Copper prices also edged back and crude oil fell again, down 2.5% from Maundy Thursday on European benchmark Brent but $6 per barrel above the previous week's 4-year lows of $60 after the Trump administration moved to raise output in what it calls the Gulf of America by easing rules around pressure level at offshore drill sites.
China's Communist Party leaders today vowed to support and boost the world's 2nd largest economy but without detailing any new stimulus.
Beijing also called again on the rest of the world to join it in defying
US President Trump's "unilateral bullying" over trade tariffs while denying that the White House has made any attempt to open negotiations.
Even so, media reports say that China has exempted some US imports from the 125% trade duty it's imposed in response to Trump's Liberation Day tariffs.
The Port of Los Angeles is on track to see freight vessel arrivals sink by 1/3rd from May last year. US consumer confidence has dropped by the same proportion according to the University of Michigan's latest survey.
Over in India, "Shoppers aren't buying gold, and jewellers all over the country are feeling the slowdown," says Surendra Mehta, secretary of the India Bullion and Jewellers Association (IBJA).
In contrast to China's fast-swelling
gold ETFs, the world's largest exchange-traded gold fund, the SPDR Gold Trust (NYSEArca: GLD) saw net outflows of investment cash again Thursday, shrinking it 0.4% for the week so far.
Smaller competitor the IAU also shrank yesterday, but held on track for a 4th consecutive week of expansion, growing by 0.4%.
Silver's giant SLV ETF shrank to head for its 1st contraction in 3 weeks, down 1.1% in size from last weekend.
London silver bullion today erased Tuesday's price-jump, dropping back through $33 per Troy ounce and putting the Gold/Silver Ratio back up near 100,
a Depression-era level for industrially-useful silver in terms of its 'safe haven' cousin hit when US President Trump imposed his Liberation Day trade tariffs.
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