PHYSICALS – Smaller gold bars becoming more popular in Asia – refiners

Smaller 100-gram casted gold bars are becoming increasingly popular across Asia, refiners told FastMarkets this week.

The trading of bars weighing 1 kilogram (around 32.15 ounces) is the standard across the region but, perhaps in line with the weaker price of gold, there has been a notable increase in demand for 100-gram bars.

Spencer Campbell, general manager of Kaloti Precious Metals in Singapore, attributed the growing popularity of the smaller bars over the past six months “mainly to the price fall bringing in new investors who are starting to buy gold at the lower price levels, especially in Singapore and Malaysia, mainly in Little India areas, according to some of our local clients”.

Premiums across Asia and the Middle East on gold kilobars have been stagnant for some time, reflecting subdued demand for luxury items such as jewellery.

But lower prices are drawing in investment from those that may have previously steered clear of the precious metal. Spot gold recently hit its lowest in five years at $1,077.50 per ounce, down 43 percent from the all-time high at $1,921.10 hit in September 2011.

The 100-gram bars are often slightly cheaper than coins in relative weight terms and provide easy access into gold as a store of wealth. Still, while one large refiner also noted an uptick in demand for the smaller bars, its relatively small scale probably rules out to direct sales to the market.

If industrial users and jewellery fabricators are selling less gold, an increase in demand for 100 gram gold bars could reflect efforts to control stocks, other sources suggested.

Gold kilobars are generally the standard across much of Asia. The Shanghai Gold Exchange, for example – one of the most liquid markets on earth for the trading of gold – requires the minimum ‘Standard Weight’ of 1 kilogram on the popular four-nines contract.

The CME launched a kilobar futures contract in Hong Kong to capitalise on demand and Intercontinental Exchanges (ICE) plans to roll out a kilogram gold futures contract in Singapore later this year.

(Editing by Mark Shaw)