Demand for gold for immediate delivery in India continues to struggle, local market source said.
Discounts are averaging around $3-4 per ounce across the country on .995 gold bars and around parity on some higher-quality brands, they said.
Still, some dealers are reportedly struggling to find buyers even with discounts of around $10 on some brands compared with premiums of nearly $20 at the same stage last year.
The market in India has been dogged by a delay to the start of the crucial annual monsoon season and a seasonal slowdown after the wedding season ended.
As much as 60 percent of domestic gold demand comes from farmers who rely on agricultural output to generate cash with which to purchase jewellery – they often have no access to the formal banking system.
But monsoons have now begun across much of India and, according to local reports, in some areas there has been even more rainfall than the 88 percent of the long-term average expected by the Indian Meteorological Department.
While there is pressure on the market and little demand, it is too early to say whether or not the weaker rains will have a sizeable impact on the gold market, Metals Focus’ Chirag Sheth said. The picture will only become clearer around mid-July.
Domestic gold inventories also remain fairly high after the removal of the country’s 80:20 legislation in November. India imported around 63 tonnes in May , ccording to the first official estimate – though there could be a significant volume of doré in that number – following 81 tonnes in April and 125 tonnes in March.
In other markets, demand in Shanghai continues to look dull, local traders said. The premium in Shanghai was quoted at a steady $1.50-$2 over spot on fresh bars though traders said that rates are negotiable.
Still, recent volumes on the Shanghai Gold Exchange are encouraging considering the slowdown in physical demand across the region, traders said, reporting a good shift of metal into the country of late.
Despite this, withdrawals from the SGE – a useful barometer for local wholesale demand – for the week ending June 5 were 32.69 tonnes, the lowest in 2015 so far. More than 1,000 tonnes have now passed through the vaults this year.
In Hong Kong, traders noted an uptick in enquiries recently when the price dropped to $1,160 earlier in the month, though the usually steady market has flirted with a $1 discount at times.
Deals were being done at parity on good delivery .995 bars on some of the lesser brands, one local trader claimed.
In Tokyo, the weaker yen and generally subdued tone has kept premiums fairly stagnant, although central bank governor Haruhiko Kuroda’s comments last week - he said the yen was unlikely to weaken further – led to some small fluctuations in the local price.
The market is now firmly back in a discount, local traders said, with discounts of around 50 cents for fresh bars of reputable brand and around a discount of $1-2 on recycled and lesser brands.
In Turkey, political instability remains following the elections earlier this month, with the lira still near all-time lows. Today, gold is in slight premiums in places on the favoured LBMA .995 1kg bar but is around parity overall.
In Dubai, the market continues to fluctuate either side of level – sources quoted the market in a discount of around 50 cents this morning on non-good delivery .995 bars.
Sources in Singapore pegged the premium there at $1.10 and in Bangkok at a discount of around $1 on recycled bars and a premium of 50 cents-$1 on bars straight from the refiner.
(Editing by Mark Shaw)
The post Discounts on Indian gold widen but too soon to judge monsoon impact appeared first on The Bullion Desk.
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