Gold buying in India dries up as monsoon arrives

"Some refineries in Hong Kong have been holding inventories and sold to the market, but the scenario has changed as prices have weakened," said a Singapore-based dealer.

Premiums in Singapore stood at 50 to 80 cents, little changed from a week earlier, she added.

Spot gold was last quoted at $1,535.35 an ounce, after breaching above $1,550 earlier in the week. Bullion has been trading in a range between $1,520 and $1,550 over the past two weeks.

"As long as prices are locked in the range, we won't see much physical trade around," said the dealer.

Participants in the gold market are awaiting further clues on global economic growth, after a recent spate of soft data from the United States showed the world's biggest economy might be losing steam.

The troubling signs showed up just as the U.S. Federal Reserve's $600 billion bond purchase programme, launched last November to kick-start the economy, was set to wrap up by the end of month.

"The market is waiting to see if the United States will launch further quantitative easing measures for direction," said a Hong Kong-based dealer.

The Federal Open Market Committee is scheduled to meet on June 21 and 22, expected to shed light on future monetary policy.

Prices are capped at $1,550, but buying trickled in once prices dipped below the $1,540 level, the dealer said.

INDIA BUYING EASES AS MONSOON SEASON ARRIVES

Gold buying in India, the world's biggest gold consumer, shrank as wedding season neared its end and farmers, the traditional buyers, rushed in to buy equipment on early arrival of the summer monsoon rains, dealers and traders said.

The monsoon period is a seasonally slack for gold demand and dealers expect traders to replenish stocks from September, when festivals and weddings re-start.

But any price dips could trigger some early restocking by traders.

Premiums remained steady in the range of $1-$1.5 an ounce over London prices, and scrap flow was limited.

"Scrap is not hitting market as the general belief is that the price trend is still on upside," said an official at a private bullion importing bank in Mumbai.