The global physical gold market continues to grind along, with little optimism resonating with participants -- from producers to end-users -- with logistic firms and bankers looking for ways to sell, and distribute bullion, sources said this week in Dubai.
At an industry event in the UAE, the mood was distinctly bearish, with few signs of life. That's not to say business isn't concluding, but conditions are tough, sources said.
One senior source questioned where the product is ending up.
A banker countered by saying that demand is being satisfied on the scrap side, keeping the business moving but not developing.
High gold prices this year, up by over 15% since the start of January, has kept physical demand subdued in many key markets, but recycling has reportedly picked up.
Physical markets -- from China to India and the Middle East -- remain at a discount to the international dollar spot price as a sign of sentiment.
An ongoing six-week jewelers strike in India over a new government sales tax has seen physical sales in the country plummet. Gold imports into India, the world's largest market for exporters, dropped to record lows in February and March.
Meanwhile, as delegates discussed new exchanges and the changing face of the market, some high-level sources worried about the outlook for London and its importance in the global marketplace.
Regarding the London market, and its importance as a center for trade and price discovery, one sell side source said, "[time] is running out fast."
There is a sense that people are fighting for business in a shrinking market.
For some this equals opportunity, while others contend with a lack of revenue.
"I'm happy to see other people exit, it leaves more business for me," said one banker.
Regardless of exact methodology, the overall theme, in the physical markets, is one of difficulty.
Perhaps the end result is a necessity for local price discovery, according to sources, with eyes on the upcoming China yuan-denominated gold price fix due to start April 19.
