Tuesday, June 8, 2010

Indian Gold Demand Tails Off, Bar Premiums Shrink

Concurrent with the monsoon season, India gold demand has slowed to a trickle. The reason given, though, is high prices combined with a weakening of the rupee.
India has taken a rain-check on gold. Premiums for gold bars slipped in Asia on Tuesday after bullion raced towards a lifetime high, while purchases from Indian jewellers slowed to a trickle as the monsoon progressed in the world's largest consumer....

Demand for gold in India hinges on a good monsoon, which boosts farm output and rural incomes. July is usually a lean month in India because farmers, who make up 65 percent of the country's gold demand, spend their money on sowing crops.

No one is buying, however there are a few sellers, said Harshad Ajmera, proprietor, JJ Gold House, a wholesaler in the eastern city of Kolkata.

Although dealers in India offered gold at a discount of up to 1 percent below international prices, demand remained slow. Premiums for gold bars slipped to 50 cents to the spot London prices in Singapore from as high as 80 cents last week....

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