Spot gold prices fall over 4% since one-year high

Investors are looking at cryptocurrencies instead.

Spot gold prices have fallen over 4% since hitting a one-year high of $1,817.88 (US$1,349.22) on 7 September 2017, the Singapore Exchange (SGX) revealed.

It said soaring US equities and the heat on cryptocurrencies has resulted in the waning of investor interest in gold.

The metal's performance has also been dragged by central banks around the world lessening stimulation to their respective economies.

SGX cited BMI Research that has a forecast an average gold price of $1,684.19/oz (US$1,250/oz) in 2017, but cut its projection for 2018 and 2019 to $1,751.56/oz (US$1,300/oz) and $1785.3/oz (US$1,325/oz).

In terms of demand, global demand for bullion in Q2 also fell to an eight-year low as Indian jewellery demand shrank and ETF inflows slowed.

The YoY drop in worldwide demand for gold was largely attributable to India. Domestic demand sank 25% YoY in the third quarter after the government introduced a 3% Goods and Services Tax (GST) in July, and brought the industry under the umbrella of the Prevention of Money Laundering Act (PMLA) in late August.

However, gold opportunities present themselves in China.

China’s bar and coin demand rose 57% YoY during the quarter. China’s gold market has also seen the second-highest volume of bar and coin demand on record, largely driven by fears over a potential depreciation of the yuan and the spectre of rising inflation, SGX said.

After the government imposed restrictions on domestic real estate transactions earlier this year, and given the lack of alternative investment opportunities, investors, especially high net worth individuals (HNW), have flocked to gold.

Here's more from SGX:

Whilst there are no upstream gold mining activities in Singapore, the city-state is home to downstream international gold refineries and bullion product manufacturing plants, with significant storage capacity through Singapore Freeport. In October 2012, the government lifted the Goods and Services Tax on Investment-Grade Precious Metals.

Of the 16 mining companies listed on SGX, three stocks – all on Catalist – are focused on gold mining. CNMC Goldmine Holdings, Wilton Resources Corporation and Anchor Resources are in different stages of the gold exploration, development and production cycle.

These three gold plays have a combined market capitalisation of $321m, and have averaged a price change of -28.7% in the 2017 YTD, bringing their one-year and three-year price changes to -30.0% and -36.2%.