Imports into Turkey, the fourth-biggest consumer, more than doubled to a 4 1/2-year high of 45.5 tons in April. They held above 43 tons in May and June, the longest run in data on the Istanbul Gold Exchange’s website going back to 1995. Jewelry represented about 60 percent of the country’s consumer demand for gold last year, according to the World Gold Council.
Bullion for immediate delivery in China, the second-biggest user, averaged about $37 more than the London price since mid- June, Shanghai Gold Exchange data show. It was about $21 this year before then. The increase signals strengthening demand, Standard Bank Group said July 3.
While lower prices will make physical purchases more attractive and mining less profitable, there’s been a “dislocation” between the physical and investment market in gold over the past several months, said Ole Hansen, head of commodity strategy at Saxo Bank A/S in Copenhagen.
“Given the size of the paper market in ETFs and futures, the physical market is often having more of a psychological than actual impact,” Hansen said. “For now though, rising interest rates and a stronger dollar will keep gold under pressure no matter how strong the physical demand.”