Melbourne: Gold traded little changed in Asia amid speculation of reduced investor demand from India, the world’s largest buyer. Silver gained.
Imports of bullion by India, which uses more gold than the US and China combined, traditionally peak in May as the local wedding season drives demand. The onset of the monsoon season traditionally weakens demand, Darren Heathcote, head of trading at Investec Bank (Australia) Ltd, said on Thursday by phone.
“With an expected reduction in physical buying from India with the start of the monsoon season, support for the precious metal is likely to dwindle,” analysts from Investec said in a note to clients.
Gold for immediate delivery fell as much as 60 cents, or 0.1%, to $661.25 (Rs27,111.25) an ounce and traded at $661.85 at 15:23 Sydney time.
Fading glitter: A file photo of 22 carat gold jewellery on display in a New Delhi showroom. Sale of gold, traditionally, decreases in the monsoon.
In Japan, gold for delivery in April 2008 added ¥2, or 0.1% to ¥2,613 a gram ($668 an ounce) at 15:24 Sydney time on the Tokyo Commodity Exchange.
“In recent weeks when it has dipped down there has been some physical buying and most of it has been reported in India, obviously in line with what has been happening with the wedding season,” Heathcote said. “But now the monsoon season is approaching and as naturally happens we do get a lull.”
Physical buying from India, which accounted for 211 tonnes of gold purchases in the first quarter, jumped 50% from a year earlier, the producer-funded World Gold Council said last week. Gold traded last week at an eight-week low of $653.83.
In the next few days gold may touch a low of $655 or trade “even lower,” Heathcote said. “It may break through the support level there.”
Gold futures for June delivery fell as much as $1.30, or 0.2%, to $661.30 an ounce and traded at $662.10 at 15:24 Sydney time in electronic trading on the Comex division of the New York Mercantile Exchange.
A futures contract is an obligation to buy or sell a commodity at a set price for delivery by a specific date.
Silver rose for the fourth day following a report from precious metals research company GFMS Ltd Silver supplies fell 1.5% last year to 911.8 million ounces, GFMS, the Washington-based Silver Institute, said in a report published on Wednesday.
Silver for immediate delivery gained 3 cents, or 0.2%, to $13.06 an ounce in Sydney. Investor demand helped spur a rally that drove silver to a 25-year high of $15.20 an ounce on 11 May last year.
There is “a pretty good chance” of a similar price “spike before 2007 is over,” Philip Klapwijk, executive chairman of GFMS, said on Wednesday during a presentation to investors in New York, predicting the price could touch $15 an ounce.
Millie Munshi in New York contributed to this story.