| NEW YORK, April 9
NEW YORK, April 9 Gold stocks sitting inside
U.S. exchange warehouses have risen to a 10-month high as
physical buying has continued to weaken, underscoring concerns
about slowing demand from Asia, one of the world's biggest
consumers of jewelry and bullion bars.
Market watchers said lower appetite for gold jewelry and
investment coins and bars from Chinese physical buyers, combined
with recent outflows from gold-backed exchange-traded funds are
largely behind the rise in U.S. gold stocks held at CME Group's
COMEX warehouses, removing a key support to prices.
"There is certainly no physical tightness in gold," said
Bill O'Neill, partner at New Jersey-based commodities investment
firm LOGIC Advisors. "Why would you scramble for any physical
gold stocks when the market appears to be going nowhere at this
Total U.S. gold stocks, comprised of 100-troy ounce COMEX
approved gold bars, have risen to 7.86 million ounces, according
to latest exchange data on Monday, their highest level since
June 10. GC-STX-COMEX
COMEX gold warehouses were at a record of over 11 million
ounces at the end of 2012.
The rise in availability represents the end of the drawdown
in stocks seen last year when gold's record two-day drop in
prices unleashed years of pent-up buying by Asian investors who
spotted a bargain for coins and small bars.
They also bought large gold bars held by bullion banks which
turned to the warehouses to meet client demand.
Gold prices fell 3 percent in March for its first monthly
drop this year despite heightened geopolitical tensions
A key factor for lower bullion demand was because banks in
China have been importing less gold over the past month as
demand waned after the festival season, while cheaper prices at
home due to a softer yuan also curbed overseas purchases of the
Those factors dragged on Shanghai gold
prices, which flipped into a discount to global spot rates in
early March, with the spread widening to $10 an ounce at one
point from a holiday-demand-driven $20 premium earlier in 2014.
Similarly, the cost of borrowing gold has fallen sharply
from a five-year high set in June 2013. The one-month gold lease
rate XAU=1MLR-LON was at 0.14 percent on Tuesday, about 50
percent below the level at 0.3 percent set in July last year,
the highest since January 2009.
(Reporting by Frank Tang; Editing by Tom Brown)