Gold price loses shine as imports fall
London (Jun 13) With imports falling, demand for gold is likely to moderate further in the June quarter.
Total imports in May are estimated around 60 tonne. For the June quarter, imports will likely be below 200 tonne.
A banking official tracking gold imports said, "In May, the import bill could be around $3 billion, which means imports could be around 60 tonne. But with market price quoting at a discount of $3-4 per ounce in Mumbai, imports are losing attractiveness and hence June imports could be even below May levels."
Gold imports in last four quarters have been above 200 tonne. In the March 2014 quarter it was 178 tonne, according to data compiled by the World Gold Council.
With hailstorms affecting the rabi output and now the uncertainities surrounding the monsoon likely to impact kharif output, demand from rural buyers will be low. Seasonal slowdown after the wedding season and bearish outlook on gold prices has also impacted demand.
"If monsoon remains weak as India Meteorological Department has forecast, gold demand will be weak 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," said Ajay Kumar Kedia of commodity advisory Kedia Commodity.
Even globally investors are selling gold. Assets of the world's top exchange-traded gold fund - New York's SPDR Gold Trust - have hit their lowest since September 2008, the month Lehman Brothers filed for bankruptcy.
New York's SPDR Gold Trust said its holdings fell to 704.23 tonne, from peak of 1353.35 seen on 12 July 2012.