Mumbai: Gold demand was subdued on Tuesday afternoon with the rupee hitting a 1-week low, making the dollar-quoted yellow metal expensive, but dealers said underlying demand was still strong ahead of festivals.
“We did a few deals as traders are now holding back due to a weak rupee. Many of them are still waiting for lower levels,” said a dealer with a state-run bullion importing bank based in Mumbai.
Gold was trading 0.03% higher at Rs19,675 per 10 grams at 1:10pm, not far away from the all-time peak of Rs19,744 struck on 7 October.
The Indian rupee extended losses to one-week lows as the August factory data came in much below market expectations causing a sell-off in domestic shares and weighing on the local unit.
October to December is generally the festival season in India and demand will peak on Dhanteras, slated in November, when jewellers register the highest sales every year.
Weddings also take place during the festival season.
This has prompted MMTC Ltd, the country’s second-largest gold importer, to increase December quarter imports by 37% to 55-60 tonne.