Author: Paul Ploumis
29 May 2015 Last updated at 08:55:32 GMT
MUMBAI (Scrap Monster): The gold premiums in Mumbai remained flat with no major upticks during the week. The yellow metal continued to trade more or less on par with international prices or at a premium of $1. The premiums held firm when matched with the previous week.
Meantime, gold demand remained subdued despite sharp plunge in gold prices during the week. Gold had touched $1,180.55 per troy ounce this week, declining to their lowest level since May 11th. The prices, though managed to recover from these lows, are all set to record second consecutive weekly decline. Of late, gold prices have been tied to a tight range between $1,170 and $1,230 an ounce since mid-March.
On the other hand, strength in dollar continued to remain intact. Dollar against yen rallied to 13-year high during the week. The rise in dollar has made gold expensive for holders of other currencies. The comparatively high-performing global stock markets seem to be preventing fund flows into commodities like gold. According to dealers, people are still happy to trade in stocks, rather than gold. The global gold demand is likely to witness uptick only if stock markets start underperforming or dollar makes significant slide.
The gold demand in the country normally remains muted during summer season. Moreover, the unseasonal rains during late-March and early-April are feared to take a hit on rural gold demand during the forthcoming quarter. The World Gold Council (WGC) forecasts muted gold demand in the country during Q2 2015. The wedding season gold demand is likely to drop sharply as there are 40% less number of auspicious days during second half of 2015 in comparison with 2014. A below-normal monsoon may further dampen Indian gold demand.
Elsewhere, spot premiums at Chinese Shanghai Gold Exchange remained at $1.50 to $2 per ounce over spot prices on 1 kilogram bars. The premiums in Hong Kong hovered around 80 cents to $1 per ounce. Premiums in Singapore remained steady at $1 per ounce during the week. Gold prices in Tokyo continued to trade at a discount of 25 cents to 50 cents per ounce on account of weaker yen.