Mumbai: Demand for gold in India, the world’s top buyer, was subdued on Monday as buyers were postponing purchases as they felt there was an inauspicious phase currently, while some awaited a bigger fall in prices, dealers said.
“Despite the fall in prices, consumers are not buying due to an inauspicious period. Demand will improve only after 14 January,” said Ashok Jain, proprietor of Chenaji Narsinghji, a Mumbai-based jeweller.
According to the Hindu calendar an inauspicious month, known as Khar Mass, started on 16 December and will end on 14 January 2012, he said.
The most-active February gold contract on the Multi Commodity Exchange was 0.2% lower at Rs27,580 per 10 grams by 2:56 pm.
International spot gold prices fell nearly one percent on Monday, extending last week’s loss which was the biggest in nearly three months, as rating agency Fitch’s warning on downgrading France kept investors on edge about the situation in Europe.
The rupee, which plays an important role in determining the landed cost of the dollar-quoted yellow metal, fell on Monday on heightened risk aversion, as regional instability fears following North Korean leader Kim Jong-il’s death sent Asian currencies down.
Some buyers were on the sidelines expecting further falls in prices, dealers said.
A Reuters poll of 20 hedge fund managers, economists and traders showed expectations for international spot gold prices to fall below $1,500 an ounce over the next three months and they are unlikely to retest September’s all-time highs until later 2012 at the earliest.
The rupee’s fall meant local spot gold prices gained from Friday despite the weak demand.