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Singapore: Jewellers across Asia rushed to buy gold on Thursday, pushing up premiums in key bullion trading centres.
Dealers also noted buying from investors as surging oil prices elevated gold's appeal as a hedge against inflation. India, the world's largest consumer, was buying on dips as the busy wedding season progressed.
"I see very good investment offtake in China, Vietnam and Japan," said Albert Cheng, managing director for Far East of the World Gold Council.
"I guess in Vietnam there's a lack of investment tools and the stock market is very jittery. So people would better put money in gold. It's almost the end of the first quarter. The physical demand is very good.
Gold bars were offered at a premium of 10 US cents an ounce to the spot London price for the first time since last August in Singapore. Gold bars were on par with London prices last week
Vietnam, one of South-East Asia's main consumers, saw demand for investment falling more than 19 per cent to 56.1 tonnes in 2007, when gold began hitting a record high. But dealers said the Vietnamese were the most active buyers in recent weeks.
London (Reuters) Gold dropped four per cent to a one-month low yesterday as investors took profits after a surge that took bullion to a record above $1,000 an ounce earlier this week.
Platinum, palladium and silver also slumped.
Gold fell as low as $904.65 an ounce - a level last seen on February 18 - from $944.20/$945.00 late in New York on Wednesday, to $916.40/$917.30 at 1111 GMT.
On Monday it hit a record high of $1,030.80 an ounce, up 23 per cent since the beginning of January.
"There has been a lot of long liquidation, I think primarily driven by the flee to cash to cover other losses... especially in equities and currencies," said Daniel Hynes, metals analyst at Merrill Lynch.
Analysts, however, said they were still optimistic about gold's long-term appeal as a hedge against inflation as well as a safe-haven investment.
"I think gold will remain under pressure today and it could drag on into next week. But I don't think we are too far off some good support levels which may see it rebound," Hynes said.
UBS said in a research note it expected gold to remain volatile in the short term, being caught up in the broader deleveraging trend.
Attractive levels
"We are now at very attractive levels in many precious and base metals, but it is impossible to stand in the way of the relentless selling," the bank said.
Gold tumbled six per cent on Wednesday in its biggest one-day percentage drop in nearly two years.
"We have to see whether the funds will continue selling. If they do, of course there is a possibility that it will go down and test $900," said Ronald Leung, director of Lee Cheong Gold Dealers in Hong Kong.
The dollar firmed broadly, underpinned by sliding gold and oil prices, falling stocks and in spite of investor anxiety over troubled credit markets.
Spot platinum fell four per cent to $1,821/41,831 an ounce from $1,900/$1,910 - off a record high of $2,290 hit on March 4.
Silver dropped as many per cent to $17.51/$17.56 an ounce from $18.38/$18.43 an ounce. Spot palladium fell over five per cent to $430/$435 an ounce from $455/$460 an ounce.
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