Mumbai: Gold buying in India snapped a three-day rise and retreated on Tuesday afternoon, despite the rupee’s strength, though premiums edged higher due to lack of supplies, dealers said.
“Sales are dull from morning, Chennai is doing well though, if the rupee appreciates, they (traders in Chennai) may increase their level because of pongal (a harvest festival),” said a dealer with a state-run bullion importing bank in Mumbai.
At 1:43pm, front-month gold for February delivery was steady at Rs 20,411 per 10 grams, as support from overseas market was offset by a stronger rupee back home.
Prices are still 2.45% lower than the all-time high of 20,924 rupees struck in early Dec. International gold inched up on persistent worries about indebted euro zone countries.
The rupee was at Rs 45.22/45.23 per dollar, stronger than Monday’s close of Rs 45.45/46, tracking gains in domestic shares.
The local currency plays an important role in determining the landed cost of the dollar-quoted yellow metal.
Dealers said there has been a lag in procuring shipments of the yellow metal as refineries were not operating at their full capacity.
“We are not getting the material immediately, there is a week’s delay in supply,” said a dealer with a state-run bank in Mumbai.
Premiums were at $1.4 an ounce as against $1.15-1.20 at the start of the month, traders said.