Market participants expect the US dollar gold price to head lower over the next week, with US macro data and more mutterings from the US Federal Reserve on a possible rate hike as the key drivers, the S&P/Platts Global Gold Sentiment Survey indicated this week.
The poll of 20 industry participants showed that the majority of those who responded were bearish on the outlook for the gold price over the course of the coming week.
The price took a hit this week following a bullish meeting of the Fed Wednesday. It hit a weekly low of $1,244/troy oz at one point.
The CME Fed Futures fund indicated the market is now given a 34% likelihood of a rate hike in June, up from 6% at the start of the week. A 56% likelihood is expressed for July.
As of 1000 GMT Friday, dollar gold was spot bid at $1,256/tr oz.
One respondent put the price range over the next week between $1,230-1,270/tr oz. Another suggested $1,220-$1,260/tr oz.
All pointed at US data and the Fed as the key drivers.
Looking at physical market demand, namely China and India, only one contributor said that he sees this improving, largely due to the prediction of a lower spot price.
Physical demand in India this year has been the worst anyone in the business can recall.
As such some banks are simply not shipping bullion to the world's number two consumer.
"It's a matter of no demand, no a lack of supply," said one fund manager this week. "There's ample supply of gold in the market," he added.
A dealer in Ahmedabad, one of India's jewelry manufacturing hubs, backed that up saying: "It's a very dull market. We visited some jewelery showrooms but there was hardly any customer presence."
The Platts Gold Premium India 995 assessment has been at a discount to the international gold price for much of 2016. It was heard as low as a $15/oz discount Thursday, having been at a $3-$5/oz discount at the beginning of the month.
PGPI was assessed Friday unchanged on day at minus $10. China was heard around a premium of $2.
Sales during Akshaya Tritiya at the beginning of the month, India's second-largest gold buying festival, were said to be disappointingly low, with dealers reporting volumes almost 70% lower year on year.
According to the latest report by the World Gold Council, Indian jewelry demand in the first quarter fell 41% year on year to 88.4 mt, the lowest quarterly level since 2009.
The recent price dip hasn't spurred physical demand in India for now, but it does appear to have given investors a signal to top up holdings.
According to Commerzbank research Friday, Exchange Traded Funds were increased by nearly six mt Thursday.
"Some investors have clearly been viewing the lower price level as an attractive opportunity to buy. This should protect the gold price from any further slide," the German bank's research read.
The London Bullion Market Association Gold Price settled Friday morning at $1,256.50/tr oz from a May 13 settlement of $1,275.15/tr oz.
