Taiwan gold demand to fall

Taiwan gold demand to fall

TAIPEI (Reuter): Taiwanese overbought gold as tensions with China grew but demand is expected to drop after the island's presidential election, local traders said yesterday.

"Unless the newly elected President Lee (Teng-hui) says any dramatic words to spark much more serious tension with the mainland, local gold demand is likely to fall below normal levels," a trader at China Trust Bank said.

"And even if China does start new war games, they would have to be much more threatening to Taiwan to make another gold rush possible."

Traders said people were unlikely to sell the gold they bought before the election as the price remains at the same level.

Taiwan's gold imports for the first two weeks of March leapt to US$140 million compared with a normal $100 million per month.

Traditionally considered a safe haven in times of uncertainty, gold was bought heavily in Taiwan last July when China staged its first missile tests and again during the latest rounds of military exercises in the Taiwan Strait.

China has softened its stance towards Taiwan since Lee won a resounding victory in Saturday's elections.