By Huileng Tan
It's not just Brexit that's driving bullishness in the gold market where spot prices have jumped 25 percent year-to-date.
In the Land of the Rising Sun, Japanese consumers are snapping up gold due to economic jitters even as Prime Minister Shinzo Abe looks to enjoy popular support, securing 70 out of 121 seats up for grabs in the upper house at Sunday's election.
The prime minister's three-pronged package to revive the sclerotic economy – dubbed Abenomics – has led to a sharp plunge in interest rates and a gravity-defying leap in the yen.
The former has blunted the relative attractiveness of government bonds (prices in the secondary market have risen above what investors will receive in principal when bonds mature) while the latter has cheapened assets denominated in foreign currencies.
Japan's largest bullion retailer Tanaka Kikinzoku Kogyo K.K. said on Wednesday that sales in the first half of the year soared 30 percent from a year ago to 15 metric tons, The Nikkei newspaper reported.
Purchases picked up in the month of June after a lull in April and May, the newspaper added.
In the seven days from June 24 to July 4, Tanaka Kinozoku Kogyo's gold bullion sales volume doubled against the previous seven business days, the Yomiuri Shimbun reported.
The trend was also reflected on the Tokyo Commodity Exchange where the daily average volume of gold contracts traded surged 45 percent on-year and 20 percent on-month in June.
The exchange said in a news release last week that the heightened interest was due to the U.K.'s June 23 vote to exit the European Union. As markets recoiled following the unexpected vote, investors fled risky assets and sought refuge in assets perceived to be safe, such as gold.
"Highly volatile foreign exchange markets and uncertainty over long-term financial conditions prompted movement to safe-haven assets," the bourse added.