Mumbai: Gold demand in India, the world’s biggest consumer, dried up on Thursday after prices spilled past the psychologically daunting Rs 20,000 per 10 grams, dealers said.
“Demand is not coming. Jewellers are now expecting a rise in scrap gold supplies,” said a bullion dealer with a state-run bank. He said higher prices may prompt households to sell gold and may dent demand during the key Diwali festival in the first week of November.
Gold futures on the Multi Commodity Exchange (MCX) struck a record high of Rs 20,028, surpassing the previous peak of Rs 19,938 hit on 13 October. The contract has risen by a quarter in the past year.
“Nothing is happening. All is quiet,” said Chanda Venkatesh, managing director at Chanda Anjaiah Parameshwar, a Hyderabad-based wholesale bullion dealer.
“If prices sustain at current levels for next one week, people may start buying. But this year, higher prices will badly hit festival demand,” he said.
Gold rallied to fresh record highs in Europe on Thursday as the dollar slid to its lowest this year versus a basket of major currencies, boosting interest in the metal as a haven from currency market volatility.
The Indian rupee strengthened on Thursday in tandem with Asian peers and supported by firm stocks, and traders said it could breach 44 to the dollar for the first time in more than two years. A strong rupee makes the dollar-quoted yellow metal cheaper for local buyers.