Gold traders stay on sidelines due to weak rupee

Mumbai: Gold traders refrained from taking new positions on Monday despite the peak buying season, as the rupeeRs.s fall to a three-month low negated a price drop in the overseas market, dealers said.

“Local (gold) prices are in the same range. Rupee is still not in a supportive mode, and there is no benefit of correction in prices of gold,” said a dealer with a private bank importing bullion.

The most-active gold for June delivery on the Multi Commodity Exchange (MCX) was down Rs 71 at Rs 28,516 per 10 grams, after hitting a low of Rs 28,441. Silver for May delivery was 0.18% lower at 55,708 rupees per kg.

The weakness in the rupee, which plays an important role in determining the landed cost of the yellow metal, kept the downside in prices limited.

Global gold fell 1% for a second straight session on Monday to hit a one-week low after climbs in Spanish bond yields fed concerns about the euro zone debt crisis and hit appetite for riskier assets.

The market is still awaiting clarity on excise duty on unbranded jewellery, and jewellers are hopeful of a rollback after assurance from the finance minister in early April.

Wedding season is at its peak now, and Akshaya Tritiya, one of the biggest gold buying festivals, falls later this month.