Singapore: The monsoon season and the absence of major religious festivals kept the Indian gold market in the doldrums, while in other parts of Asia jewellery makers were waiting for a price correction before buying again.
Bullion has rebounded more than 8% since falling to a six-week low of $856.80 (Rs37,185) an ounce in mid-June on the back of record oil prices and a falling US dollar.
Spot gold was around $930.40 an ounce on Tuesday, higher than late New York levels.
July is usually a lean month in India because farmers, who account for 65% of the country’s gold demand, would gear their spending to sowing crops during the June-September monsoon season, dealers said.
Lacking lustre: Demand for gold also hinges on a good monsoon, which boosts farm output and rural incomes. (Photo: Jayanta Dev/Mint)
“Retail demand for gold seems to be dropping day by day. Our April to June sales are down 24% on year. If prices stay like this in the festival season, appetite for gold will fall,” said Harshad Ajmera, proprietor of JJ Gold House, a wholesale dealer in Kolkata.
“People will divert the money they have to buy gifts (in gold) to other things like electronic items,” he said.
But dealers said demand would pick up in August, when manufacturers stock up again to meet demand for festivals and the wedding season, which last until the end of the year.
Gold jewellery is an important part of Hindu marriages, partly because parents give it to their daughters for financial security.
Demand for gold in India also hinges on a good monsoon, which boosts farm output and rural incomes, and the annual rains have begun ahead of schedule after the weather department forecast a near-normal monsoon.
Bullion trading was slow in other parts of Asia after light buying from jewellers on Monday, keeping premiums for gold bars to spot London prices unchanged inSingapore, Hong Kong and Tokyo.
“I think if it backs down to below $910, or maybe $900, people will come to buy,” said Ronald Leung, director of Lee Cheong Gold Dealers in Hong Kong.
“The demand is minimum,” said Leung, who quoted gold bars at a premium of up to 20 US cents an ounce.
Gold bars were on a par with the spot London price in Tokyo, with dealers noting a mixture of buying and selling from retail investors.
There was buying from the electronics sector but volumes were low, they said.
In Singapore, a centre for bullion trading in South-East Asia, premiums barely changed at between 40 and 60 cents an ounce.
“It looks like prices are not high enough to sell and make profit yet it’s not low enough to buy either. I guess strong buying will only come if gold falls below $900 again,” said a physical dealer in Singapore.
“We saw light buying from Indonesia yesterday (Monday) but then buyers disappeared when the price rebounded.”
Ruchira Singh in Mumbai contributed to this story.