Mumbai: India gold buying edged up on Wednesday afternoon as the rupee, which hit its highest level in four-and-half months, made the yellow metal cheaper at home despite recording highs overseas, dealers said.
“Still there is buying, I did some deals at around $1,310-1,312 (an ounce) as the rupee is in support,” said a dealer with a state-run bank in Mumbai, which deals in bullion.
International gold hit a new high of $1,313.20 an ounce, its 10th record in 12 sessions, as a weak dollar supported and investors eyed a possible further cash injection from the Federal Reserve.
MCX gold was trading 0.02% lower at Rs19,179 per 10 grams, after hitting a high of Rs19,210, close to an all-time high of Rs19,257 struck on 15 September, as a strong rupee weighed on sentiment.
The Indian rupee stayed close to four-and-half month highs reached earlier in the day on Wednesday boosted by the dollar’s broad losses versus majors and sustained capital inflows.
The rupee plays an important role in determining the landed cost of the yellow metal, which is quoted in dollars.
India, the world’s biggest consumer of the yellow metal, is in the middle of a festival season, with dussera in October and Dhanteras in November, when jewellers register highest sales every year. Weddings also take place during the festive season.
“People are taking delivery of what they booked, just that they are a bit more careful as prices are near their high,” said Naresh Devatha, partner at Bangalore-based wholesaler Micro International, adding “anything below 19,000 people are ready to buy as Navratri is due next week.”
Scrap sales slowed after prices retreated from their peak as seller’s awaited prices to breach the keenly-watched Rs20,000 rupees level.
“We saw good collections at Rs19,400 for 2-3 days, now they all want higher prices as they have been hearing on TV and in newspapers of targets of Rs20,000 by Diwali,” said Jitendra Kantilal, partner with scrap-dealer Jugraj Kantilal and Co.