The retail price of gold in Japan has jumped to a record high as the yen extends its historic decline against the US dollar and cash-laden households rush to find a hedge against inflation. Buying of yen-denominated gold at the country's largest dealer has pushed the price of the yellow metal above the 10,000 yen per gram level for the first time in recent days. It was trading at 10,100 yen on Tuesday, according to retail prices published by Tanaka Kikinzoku, one of Japan's largest gold retailers. The retail price of gold in Japan, the main benchmark price for the metal in the country, tracks global spot prices, which have been elevated by the coronavirus pandemic, the war in Ukraine and tensions between China and the United States. It also reflects a sharp decline this year in the yen, which recently surpassed ¥146.5 against the dollar, a level that last year prompted verbal market intervention by Japanese authorities. Currency analysts said the yen would likely remain weak as long as there were no signs from the Bank of Japan that it was ready to tighten its ultra-loose policy and the interest rate gap with the United States and Europe remained wide.
Economists said the move in retail gold prices, which extends an 18-month rally in gold shops across Japan, was part of a rapid shift in household attitudes toward risk as years of deflation have given way to an increase Jordan Mobile Number List in consumer prices. Jesper Koll, an economist and adviser to the Japan Catalyst Fund, an investment fund, said the main driver of purchases by Japanese households was an urgent search for protection against inflation after years without strong incentives to move assets out of cash. The fact that gold is a different asset from the yen helps, but the trigger is inflation," Koll said. Japanese households emerged from the pandemic with a record more than 2 trillion yen in accumulated assets or about four times the country's annual gross domestic product.
Half of that amount was held in cash and deposits, a balance closely watched by Japan's brokerages, who are trying to convince clients that inflation is here to stay and that they now need to shift their savings toward other financial products. Core consumer price inflation in Japan reached 3.1 percent last month. “Inflation in Japan is at a crossroads,” said Tomohiro Ota, senior Japan economist at Goldman Sachs, noting that although consumer prices continue to rise, part of the increase is due to temporary government subsidies, while consumer growth has stagnated since March. Goldman Sachs predicts that the Japanese currency will reach 155 yen per dollar in the next six months.