Mumbai: India’s gold buying retreated on Wednesday afternoon from the previous day’s pick-up as a weaker rupee, which makes the dollar-denominated yellow metal expensive, outweighed easing international prices, dealers said.
“There are not many deals today as rupee weakened expectedly, yesterday we saw good buying below $1,200 an ounce,” said a dealer with a state-run bank in Mumbai. “Only exporters are covering today.”
The rupee dipped to its lowest in nearly two weeks as a fall in regional share prices raised concerns whether robust capital inflows would sustain for the rest of the year.
A weak rupee makes the dollar-quoted asset expensive.
International gold prices slipped as the dollar rose against the euro after the US Federal Reserve announced plans to boost the flagging economy and as physical buying interest waned.
“It (gold buying) is pretty slack today, since the rupee has gone high, costing has also increased, good buying could come in at around Rs18,000 levels,” said Ajay Singh, proprietor with Jaipur-based Kiran Jewellers, which caters to markets in Rajasthan and Delhi.
Indian gold demand is set to pick up for the busy festival season, starting with Raksha Bandhan on 24 August, and extending till Dhanteras in November, the single-biggest gold buying day.
“There could be heavy buying below Rs17,500 (per 10 grams),” said another dealer with a private bank.