Gold for immediate delivery in Mumbai remains in discounts of $3-4 per ounce on recycled bars and between parity and a $0.50 premium on fresh .995 bars, sources said.
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.
India’s meteorological department recently downgraded its forecasts for the rains to 88 percent of the long-term average. Far below the typical 96-104 percent, locals would deem this a drought.
While monsoons have reportedly struck the southern region of Kerala, much of the country is still waiting for the rains to arrive.
“The outlook remains weak for gold in India following the forecasts of a weak monsoon season,” Ajay Kumar of local commodity advisory Kedia Commodity told FastMarkets.
“The deficient rains are feared to dent gold demand in the country, as the rural population accounts for 60 percent of the Indian gold demand – poor rains may adversely affect the agricultural output, which in turn may impact gold buying,” he added.
A developing cyclonic storm called Ashobaa is disrupting the advance of the monsoons, according to local reports. On top of the weak rains that have already been forecast for June, this may cause more problems for India’s gold consumers.
Domestic gold inventories also remain fairly high after the removal of the 80:20 ratio legislation in November. The country imported 81 tonnes in April following 125 tonnes in March and around 68-70 tonnes were imported in May. The official figure is not due until mid-June.
In other markets, demand in Shanghai continues to look dull, local traders said. The premium in Shanghai was quoted at a steady $2 over spot. But local traders fear a sustained sell-off across Asian markets and particularly in China should the spot price fall below $1,180.
Spot gold was last just above this level at $1,181 per ounce.
Despite the lack of movements and unusually quiet conditions, one local trader said that the market “wants to be bullish”.
Withdrawals from the SGE – a useful barometer for local wholesale demand – for the week ending May 29 were 37.08 tonnes – the lowest in nearly two months. More than 980 tonnes have passed through the vaults in 2015 so far.
In Tokyo, the weaker yen and generally subdued tone has kept premiums fairly stagnant, although central bank governor Haruhiko Kuroda’s comments – he said the yen was unlikely to weaken further – has given the Japanese currency a push in recent sessions, triggering some small fluctuations in the local price.
The market remains either side of parity, sources indicated, with some small discounts of around 50 cents to the London spot price at times and premiums of up to 50 cents at others – slow demand particularly in Hong Kong and China is weighing.
In Turkey, political instability remains following last week’s election, with the Lira crashing to all time lows. Today, gold has swung to a marginal premium in places on the favoured LBMA .995 1kg bar but overall there is a distinct lack of demand.
In Dubai, the market is in a premium of around 50 cents on non-Good Delivery four-nine and 995 bars, sources said, although the market has been fluctuating between marginal discounts and premiums for some time.
In other locations, Hong Kong sources pegged the premium at $1.00 over spot, in Singapore around $1 and in Bangkok at small discounts on recycled bars of around $1 and premiums of 50 cents-$1 on fresh refined bars.
(Editing by Mark Shaw)
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