Opinions were mixed on the dollar gold price outlook for the next seven days, with half of respondents to the S&P Global Platts weekly survey seeing a move higher and the rest forecasting either lower or stable prices.
Attention has been on this week's Federal Open Market Committee meeting, with participants fixated on future guidance on interest rate adjustments.
TD Securities' Bart Melek told clients that the hawkish message from the FOMC proved to be a catalyst for a gold correction this week.
"Traders started to take the shine off the yellow metal shortly after the US central bank unambiguously signaled that it was happy to keep rate hikes on the previously announced trajectory and after it gave a broad layout of the plan shrink its $4.5 trillion balance sheet," Melek said.
The London Bullion Market Association Gold Price -- administrated by IBA, part of Intercontinental Exchange -- settled Friday morning at $1,256.60 from $1,274.25/oz a week ago.
The LBMA price started the week at $1,269.25/oz.
Last week participants forecast the dollar price stable to higher, in a range of $1,240-$1,320/oz. This week that range is predicted between $1,240-$1,275/oz.
A third of respondents see the price heading lower, with 16.8% forecasting the price stable over the next seven days; 60% of respondents believed interest rate expectations would be the biggest influence either way while 40% believed that physical demand could be supportive.
However, if this week has been anything to go by that is unlikely. India, the world's second largest physical consumer of gold after China, has had a "terrible" week of demand, with buying conditions reported at a standstill.
As such the market remains in a $3-4/oz discount to the international price. The Platts Gold Premium India was assessed at minus $3/oz Friday from minus $4.5/oz a week ago.
"It's completely dead," said one logistics source. A refiner described conditions as "very bad."
There were a couple of rumors doing the rounds this week, one regarding the possibility of an Indian bullion exchange and the second that the current 10% import tax on refined gold could be reduced.
Both were downplayed.
A reduction in the duty "is not possible, just rumors," according to the logistics source.
The refiner agreed: "We Indians like to talk too much."
A broker in Mumbai told S&P Global Platts: "Talks about [a bullion] exchange [have been] going on for long time. [An] import duty cut at this moment is unlikely."
A banker in Mumbai agreed. "The idea of an exchange [to create a local benchmark price] has been talked about for years now. Nothing has happened."
A large jewelry chain in Delhi said that both ideas were nothing more than "gossip based on hope."
Elsewhere, physical premiums have been reported around $8-$10/oz in China, up from $6-8/oz last week.
Premiums in Dubai and Turkey remained unchanged on week, around minus $1/oz to plus $1/oz.
