Physical gold demand from key hubs China, India and Turkey weak: Barclays
London (Jun 8) Physical gold demand by key consuming nations China, India and Turkey remains weak even though the dollar price of the metal remains under pressure, Barclays said Monday.
"In line with seasonal norms, demand in India has slowed as local premiums swung to a discount," Barclays analyst Suki Cooper said.
Platts Gold Premium 995 India was assessed at minus $1.25/troy oz Friday. So far on Monday a countrywide discount was still being reported.
Cooper noted that India imported 65 mt of gold in May, compared to 87 mt in April.
"Our India economists note that the southwest monsoons are running late but it is too early to judge whether this will be a concern, in their view. The monsoon rainfall has been downgraded," Cooper noted.
Indian demand is highly dependent on a heavy monsoon and resulting harvest.
The more money in the farmer's pocket the more there is to invest in gold in areas of the country lacking a decent or reliable banking system. Looking at China, the world's biggest consumer and producer, Cooper noted that volume traded on the Shanghai Gold Exchange has eased as local prices have fallen.
"The rolling monthly average has fallen to its lowest level since the start of the year. The outperformance of the equity market, coupled with lower gold prices, has seen interest in gold wane," the analyst said.
The London Bullion Market Association Gold Price settled Monday morning at $1,173.40/oz from $1,187.30/oz June 1.
Turkey imported only 1.6 mt of gold in May, taking its imports for the year to date to 10 mt -- down 60% on year, according to Barclay's data.
Platts reported recently that much of the weakness stems from the appreciation in local prices rather than the downturn of the dollar price.
Cooper added that political uncertainty in the country is also seeing a surge in scrap supply adding pressure to bullion demand.
Source: Platts