Gold for immediate delivery in Mumbai is available at discounts of $3-4 per ounce on recycled bars and between parity and a $0.50 premium on fresh four-nine bars, sources said.
With the wedding season ending in June, most related purchases should already have taken place by now – from mid-June to around October 22 there will be a noticeable slowdown.
The market instead is predominantly focussed on the fast-approaching monsoon season, which is expected to start any day now.
But there are widespread fears of a drought this year – India’s meteorological department downgraded its forecasts for the rains to 88 percent of a long-term average, which would be far 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 gold demand.
Domestic gold inventories also remain fairly high – 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 around $1.50-2 over spot, with participants keeping their powder dry while awaiting any news to drive the markets one way or the other.
“The market is nervous – most people are waiting on the sidelines and it’s all dollar-related moves at the moment,” MKS’ Bernard Sin told FastMarkets. “There’s buying interest on the dips around $1,180 but there’s a lot of selling around the $1,200 mark.”
Spot gold was last between these two poles, trading at a little changed $1,190.40/1,191.20 per ounce.
Withdrawals from the SGE – a useful barometer for local wholesale demand – for the week ending May 22 were 42.49 tonnes. More than 945 tonnes have passed through the vaults in 2015.
But the weekly totals have been slowly easing since mid-April – it was around 40 tonnes in April compared with nearer 50 tonnes in March; it may have fallen further in May.
In Tokyo, the weaker yen and generally subdued tone kept premiums fairly stagnant.
The market remains around parity, sources indicated, with some small discounts of around 50 cents to the London spot price – slow demand particularly in Hong Kong and China is weighing.
The Turkish market also remained fairly stagnant, with many consumers now looking ahead to Sunday’s crucial elections, which are likely to have implications for the country’s economy. Economic instability and double-digit unemployment have long hindered gold consumption in Turkey.
Today, the premium remained at parity with some small discounts on the favoured .995 LBMA 1kg bar, according to Troy Precious Metals GoldTakas system.
In Dubai, the market has dropped into small discounts of around 50 cents on .9999 and .995 bars.
In other locations, Hong Kong sources pegged the premium at $1.00 over spot, in Singapore around $1.10 and in Bangkok at a small discount.
(Editing by Mark Shaw)
The post Threat of drought in monsoon season weighs on Indian gold premium appeared first on The Bullion Desk.
No comments:
Post a Comment