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Nov 2, 2009
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Gold premiums hardly move; Indian weddings offer hope

By
Reuters
Published
Nov 2, 2009

By Lewa Pardomuan

SINGAPORE (Reuters) - Premiums for gold bars were barely changed in Asia on Monday 2 November after jewellers turned their back on the physical market due to volatile prices, but weddings in main consumer India were expected to stir up trade in coming days.



Even though India's festival season peaked with Diwali, the festival of light, in October, the marriage season will last until December. Parents give gold jewellery to their daughters for financial security at weddings.

Gold was steady at $1,044.50 an ounce in thin trade as dealers awaited a series of U.S. data for direction. It fell about 1 percent last week, marking its first weekly loss since the week of Sept. 25 after four consecutive weeks of gains.

"After the large sell off on Friday (30 October), I would say the overall mood remains a little cautious moving forward, and the dollar may carry along a bit of upside momentum as equities and other higher-yielding assets take a step back," said Adrian Koh, analyst at Phillip Futures in Singapore.

"I think this week the markets will be focused on a long string of economic data in the U.S., like the jobs data, FOMC rate decision, durable goods orders and auto sales figures."

Premiums for gold bars were barely changed at 60 to 70 U.S. cents an ounce to the spot London prices in Singapore, with dealers expecting India to buy again on dips.

"Today is just exceptionally quiet. Sales of scrap from Indonesia have slowed down because of a strengthening rupiah," said a physical dealer in Singapore.

"I guess premiums are steady because there's still demand elsewhere. We did see physical buying from India last week," he said.

Indians purchased 56 tonnes of gold during this year's Dhanteras and Diwali week from Oct. 12 to Oct. 19, up 5.7 percent from the same period last year, suggesting that a firmer rupee helped jewellers cope with record prices.

Gold struck a record at $1,070.40 on Oct. 14 after persistent weakness in the U.S. dollar ignited fund buying. Gold is seen as a hedge against both inflation and a depreciating dollar.

This week's data, including the all-important U.S. non-farm payroll figure on Friday 30 October, as well as the Federal Reserve's meeting on rates, will set the tone for the dollar, whose movements will also influence gold.

Gold bars were offered at a premium of 30 to 50 cents to the spot London prices in Hong Kong, steady from last week.

"There's a lot of data to watch this week. That's why the market doesn't move much and I guess gold is still watching the dollar," said a physical dealer in Hong Hong.

"We've seen physical buying at below $1,040 an ounce. We night see some selling if gold goes up to $1,050," he said.

The euro hovered at $1.4774 on Monday 2 November, up 0.4 percent, recovering some of its losses from Friday 30 October when it fell over 0.8 percent.

(Editing by Michael Urquhart)

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