Author: Paul Ploumis05 Jun 2015 Last updated at 07:48:37 GMT
MUMBAI (Scrap Monster): The gold premiums in Mumbai dropped significantly following India’s meteorological department forecasting weak monsoon season ahead. The yellow metal continued to trade more or less at parity to $0.50 premium with international prices. Also, gold for immediate delivery was available at discounts of $3-$4 per ounce on recycled gold bars.
According to met department, monsoon in the country is likely to remain subdued this season. The forecast says the country is likely to receive only 88% of its long term average rainfall this year, downgrading from the earlier forecast of 93%. This is far below the typical levels of 96%-104%. The deficient rains are feared to dent gold demand in the country, as rural population accounts for 60% of the Indian gold demand. Poor rains may adversely affect the agricultural output, which in turn may impact gold buying.
Gold inventories in the country are reportedly at high levels on account of increased gold imports and waning demand. India imported 81 tonnes of the yellow metal in April this year, following excessively high imports of 125 tonnes during March, as per official government data. Although imports cooled off during May, the monthly imports are likely to be around 65-70 tonnes, though official figures are not yet available for the month. With wedding season coming to an end in June, the period until October is likely to witness slowdown in gold purchases. As per industry sources, 40% less number of auspicious days for wedding as per Hindu calendar may result in sharp drop in gold demand during second half of 2015 in comparison with 2014.
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 Turkey remained at par with small discounts. Hong Kong premiums quoted at $1 over spot. Gold prices in Tokyo continued to trade at a discount of 50 cents per ounce to at parity on account of weaker yen. In Dubai, gold traded at a discount of around 50 cents on .9999 and .995 gold bars. In Singapore, gold premiums ranged between $1 and $1.1 over spot price.