 "Gold at discount as market enters oversupply zone")
With the gold buying season coming to an end, physical delivery premiums have vanished and the price of the yellow metal is quoting at a discount of $3-4 per ounce — a level not seen in the past four months.
Last month, the market was trading at a small premium. Before that small discounts were available after the government removed the 80:20 scheme on gold import in November last year.
“With the marriage season coming to an end and rural demand tapering off due to hailstorm, the market is in the oversupply zone,” said a trader.
Imports in May are expected to remain subdued. Oversupply is due to stock available from earlier imports and gold imported for export purposes has also started entering the domestic market, albeit briefly.
Monsoon will be a key driver of gold sales in the coming months. If it remains weak as predicted by Indian Meteorological Department, then the rural demand for gold will be lower.
Sources said illegal imports were strong during March and April but after the Akshaya Tritiya, illegal imports have come down. The demand is likely to remain low till the festive season.
At present, technically gold prices are looking weak. Gold is now trading below its 200 moving average, which is around $1,215 per ounce. According to an Emkay Commodities report, gold is facing resistance above $1,230 and has support around $1,160 per ounce. Emkay report said MCX gold futures has Rs 26,950 support level below which market looks weak. On Tuesday evening, gold was trading at Rs 27,050 per 10g on the MCX. Besides, rupee fell against dollar by 42 paise, providing support to domestic gold price despite weak cues globally. Mumbai spot gold prices on Tuesday closed at Rs 27,210 per 10g.
The gold price in the international spot market was down $9 at $1,194.5 per ounce — its lowest in two weeks and down significantly from last week’s heights of $1,230. The fall is largely due to a appreciation of dollar on renewed concerns over Greece’s position in the Euro zone.
Silver also succumbed to the dollar strength — it was last down 27 cents at $16.78/16.83 per ounce, also its lowest since May 13. On the MCX, silver was trading at Rs 38645 per kg.
Last month, the market was trading at a small premium. Before that small discounts were available after the government removed the 80:20 scheme on gold import in November last year.
“With the marriage season coming to an end and rural demand tapering off due to hailstorm, the market is in the oversupply zone,” said a trader.
Imports in May are expected to remain subdued. Oversupply is due to stock available from earlier imports and gold imported for export purposes has also started entering the domestic market, albeit briefly.
Monsoon will be a key driver of gold sales in the coming months. If it remains weak as predicted by Indian Meteorological Department, then the rural demand for gold will be lower.
Sources said illegal imports were strong during March and April but after the Akshaya Tritiya, illegal imports have come down. The demand is likely to remain low till the festive season.
At present, technically gold prices are looking weak. Gold is now trading below its 200 moving average, which is around $1,215 per ounce. According to an Emkay Commodities report, gold is facing resistance above $1,230 and has support around $1,160 per ounce. Emkay report said MCX gold futures has Rs 26,950 support level below which market looks weak. On Tuesday evening, gold was trading at Rs 27,050 per 10g on the MCX. Besides, rupee fell against dollar by 42 paise, providing support to domestic gold price despite weak cues globally. Mumbai spot gold prices on Tuesday closed at Rs 27,210 per 10g.
The gold price in the international spot market was down $9 at $1,194.5 per ounce — its lowest in two weeks and down significantly from last week’s heights of $1,230. The fall is largely due to a appreciation of dollar on renewed concerns over Greece’s position in the Euro zone.
Silver also succumbed to the dollar strength — it was last down 27 cents at $16.78/16.83 per ounce, also its lowest since May 13. On the MCX, silver was trading at Rs 38645 per kg.