Mumbai: Gold edged lower on Monday afternoon in step with overseas markets, but physical buying was dull as traders waited for greater falls ahead, dealers said.
“Buying is slow today, I just booked for 40 kgs from morning. I have a lot of orders in between $1,325-1,330 (an ounce),” said a dealer with a state-run bank in Mumbai.
The most-active April contract on the Multi Commodity Exchange (MCX) was trading 0.30% lower at Rs 20,209 per 10 grams at 2:15pm. Gold prices were still 4.2% lower from the all-time high of Rs 21,101 struck in early December.
A strong rupee further depressed prices. The rupee plays an important role in determining the landed cost of the yellow metal quoted in dollars.
Dealers said supply constraints remained, but expect normal flows in coming weeks.
“Supplies are slowly getting back to normal, we could see easy flow of supplies in few weeks,” said the dealer.
Excessive snow in refining areas and lower carry forward stock from last year has been affecting supplies of the yellow metal.
Gold imports in India rose 18% in January to 40 tonnes provisionally, and wedding season could further boost demand, head of a trade body said.
India accounts for 20% of the global demand for jewellery, and the next marriage season in the country will kick off in February.
Winter harvesting season is underway in India and is expected to leave more disposable income with rural households, which contribute significantly to gold demand.
Gold is widely given in religious celebrations and weddings in India.