Australia & New Zealand Banking Group Ltd. (ANZ) started a second bullion vault in Asia to cater for growing physical demand that the Melbourne-based company sees driving prices as much as 14 percent higher over two years.
The leased facility, which can hold 50 metric tons, opened in Singapore last month, adding to storage in Hong Kong, Perth and Zurich, said Eddie Listorti, co-head of fixed income, currencies and commodities. The vault could keep $2.13 billion of metal at yesterday’s close, Bloomberg calculations show.
The bullish stance from ANZ, which has forecast gold at $1,400 an ounce in 2014 and $1,500 in 2015, contrasts with the outlook from Goldman Sachs Group Inc., which predicts lower prices as the U.S. Federal Reserve scales back stimulus. Gold has plunged 21 percent this year, tumbling into a bear market as stocks and the dollar rallied.
“There is nothing that indicates the strong physical demand trend that we have seen will reverse,” Listorti said in an interview in Singapore. “We see demand coming from financial institutions. Gold accounts for a very small percentage of some central banks’ reserves. There’s room to grow there.”
Gold for immediate delivery fell 0.6 percent to $1,317.12 an ounce at 4:14 p.m. in Singapore after rising 7.4 percent in July, the best monthly advance since January 2012. Goldman Sachs predicts futures at $1,050 an ounce on the Comex in New York at the end of next year.
Demand for physical metal is robust, irrespective of prices, said Listorti, whose team distributes about 15 percent of the world’s primary gold production. Clients include central banks, sovereign wealth funds and asset managers, he said. The company has a supply agreement with the Perth Mint and is one of the top three providers of gold into China, the bank said.
ANZ joins JPMorgan Chase & Co., UBS AG and Deutsche Bank AG in offering gold-storage services in Singapore as the Southeast Asian nation plans to become a regional trading hub to take advantage of growing wealth in the Asia-Pacific region. The new facility is sited at the Singapore FreePort, located in the east of the country near Changi Airport.
The bank may add more bullion storage in Singapore or other Asian locations, said Listorti yesterday.
India and China are the world’s two largest gold consumers. The number of high-net-worth individuals in the Asia-Pacific region expanded 9.4 percent last year, according to Cap Gemini SA (CAP) and Royal Bank of Canada.
ANZ said in a July 11 report that it’s constructive on gold, expecting prices to rebound into next year and 2015, according to Chief Economist Warren Hogan and Mark Pervan, commodity research head. Tight supply, prices below production costs and central-bank buying will support the metal, they said.
The Chinese central bank’s gold holding accounted for 2 percent of total reserves at the end of March, while the proportion for India was 10 percent, according to data from the producer-funded World Gold Council. That compares with a 76 percent share for the U.S. and 72 percent for Germany, it said.
World demand dropped 13 percent on year in the first quarter to 963 tons as outflows from exchange-traded products offset growth in jewelry, bars and coins, council data show.
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