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With the gold buying season coming to an end, the price of the yellow metal is quoting at a discount of $3-4 per ounce, a level not seen in the last 4-5 months.
Last month, the market was trading at a slight premium. Before that small discounts were available after the government removed 80:20 controls on import of gold in November last year.
“With the marriage season demand coming to an end and rural demand tapering off due to hailstorms, market is in oversupply zone,” said a trader.
According to sources, gold imports in April was 69 tonne, but it fell sharply after Akshaya Tritiya on 21 April. After that, only 7 tonne arrived, they said.
Imports in May are expected to be subdued because of oversupply in the market even though exporters may import gold to re-export it.
Sources said that unofficial imports were strong during March and April, thereby limiting official market flows but after Akshaya Tritiya unofficial slows have also reduced and the discount in the market has further impacted the flows.
The demand for the yellow metal is likely to remain low till the festive season begins. Forecasts of weak monsoon will further restrict demand.
Imports in May are expected to be subdued because of oversupply in the market even though exporters may import gold to re-export it.
Sources said that unofficial imports were strong during March and April, thereby limiting official market flows but after Akshaya Tritiya unofficial slows have also reduced and the discount in the market has further impacted the flows.
The demand for the yellow metal is likely to remain low till the festive season begins. Forecasts of weak monsoon will further restrict demand.
At present, gold prices are looking technically weak. Gold is now trading below its 200 moving average, which is around $1,215 per ounce.
As per a Emkay Commodities report, gold is facing resistance above $1,230 and has support around $1,160 per ounce.
As per a Emkay Commodities report, gold is facing resistance above $1,230 and has support around $1,160 per ounce.
