September 5, 2019 / 10:49 AM / a month ago

Japan's retail gold price clambers to highest since 1980 amid global economy jitters

TOKYO (Reuters) - The retail price of physical gold in Japan climbed to its highest in nearly 40 years on Thursday, a surge accentuated by fluctuations in the value of the yen but mirroring a global hunt for the safe-haven precious metal amid worries that the U.S.-China trade row could further depress the global economy.

Japan’s biggest gold retailer Tanaka Kikinzoku said the retail price of refined gold, revised once a day in yen, stood at 5,325 yen ($49.99) per gramme on Thursday, not including consumption tax, up 0.7% from Wednesday.

That was the highest since Feb. 14, 1980 - a year when the U.S. President was Jimmy Carter and Honda Motor Co said it would build Japan’s first U.S. car assembly plant in Ohio.

Trading has become so brisk, according to the retailer, that customers now need to be patient in concluding transactions.

“Demand for gold transactions has picked up since mid-August,” said Tanaka Kikinzoku spokeswoman Rie Kato. “Retail customers, whether buyers or sellers, now need to wait for two-three hours to get their deals done.”

The sharp gain comes in line with a rally in global gold prices.

International benchmark spot gold prices jumped to a fresh six-year high, or highest since April 2013, on Wednesday due to jitters about the state of the global economy. They have risen more than 20% so far this year though they fell on Thursday to $1,545.00 an ounce.

Tokyo Commodity Exchange (TOCOM) gold futures <0#2JAU:> have also been surging since August. The benchmark contract for August 2020 delivery touched an intra-day record high of 5,285 yen per gramme on Thursday.

“The reason why Japan’s gold prices hit an about 40 years high, instead of a six-year high, is the yen’s fall against the dollar from the early 2010s,” said Toshitaka Tazawa, an analyst at commodities broker Fujitomi Co.

The yen has gained about 3% against the dollar so far this year, but it is still 8% weaker than levels in April 2013.

The highest prices in four decades attracted many retail investors to take profit, Tazawa said.

Tanaka’s monthly gold purchase from customers increased 40% in July and as much as 70% in August compared with the average monthly volume between January and June. Tanaka’s sales volume, meanwhile, fell slightly, sliding 10% in July and 20% in August from a monthly average for the first half of this year.

“Japanese gold investors are contrarians, selling at high and buying at low, whereas western investors such as funds tend to do the opposite,” said Chiyoki Chen, an analyst at Sunward Trading.

“With the retail prices above 5,000 yen, we may see more individuals cashing out gold,” he said.

(Graphic: Japan retail gold prices link: here)

Reporting by Yuka Obayashi; Editing by Kenneth Maxwell

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