The premium for gold in Mumbai is stagnating amid subdued demand, sources said – a story that is repeated across Asian markets.
The rate on gold for immediate delivery in the Indian capital dropped to $1-2 over the London spot price although some sources suggested that deals are being done at parity in the outer regions.
“We’re not seeing any big flashes of demand at the moment, which is clearly being reflected in the premiums,” Metals Focus’ Chirag Sheth told FastMarkets.
High domestic inventories, particularly following huge imports of 125 tonnes in March, are weighing. Despite an early surge in April, an estimated 70 tonnes were imported to India last month, largely in line with annual expectations.
Despite continued reports that unseasonal storms last month weighed on demand over Akshaya Tritiya, sources have said that the near-term impact was mild and the effect on annual consumption figures will be negligible.
But the country’s crucial monsoon season is fast approaching. India’s Indian Meteorological Department predicts rains to be 93 percent of a long-term average, which would be below the typical 96-104 percent.
Since India’s 120 million farmers account for around 60 percent of domestic consumption, any impact on agricultural output can have a sustained effect on demand.
In other markets, demand in Shanghai remained muted, sources said – the market continues to await catalysts. In the last month alone, the gold price was effectively unchanged on a month-to-month basis at $1,183/1,184 per ounce, reflecting the lowest degree of volatility in the market this year.
Today the premium in Shanghai was quoted at around $1.50-$2 over spot, reflective of the gradual decline in premiums across the region of late.
“There’s good demand but generally the market is consolidating and, more importantly, it is being patient – everything is completely dollar-driven at the moment,” a bullion dealer told FastMarkets.
Volumes on the Shanghai Gold Exchange recently have remained high if slightly lower so far this week but price fluctuations have been very limited in recent sessions due to a lack of catalysts, pushing many investors back into equities.
Withdrawals from the SGE – a useful barometer for local wholesale demand – for the week ending April 24 were 50.80 tonnes, up from 49.95 tonnes in the prior week. More than 780 tonnes have passed through the vaults in 2015.
Although Tokyo is observing a holiday on Tuesday, the last indications from sources were that the market has remained at a small discount of around $1 to the London spot price – the slow demand in Hong Kong and China and lack of price movements are weighing.
The Turkish market has climbed out of a small discount – some transactions this morning were made at parity on the favoured .995 LBMA 1kg bar, according to Troy Precious Metals GoldTakas system.
Economic instability and double-digit unemployment continue to hinder consumption although the wedding season is approaching when demand is expected to pick up – premiums of $2-3 are expected, the company told FastMarkets.
In Dubai, premiums were stagnant once again – this morning local jewellers quoted .9999 and .995 bars at parity.
In other locations, Hong Kong sources pegged the premium at $1.20 over spot, in Singapore around $1.20 and in Bangkok around $1.50.
(Editing by Mark Shaw)
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