Mumbai: India’s gold demand ebbed on Wednesday on rising prices, a reversal from the healthy offtake seen last week, traders said.
“There was demand last week but nothing as of now... as prices have jumped,” said Haresh Acharya, head of bullion desk, Parker Agrochem in Ahmedabad.
The benchmark June gold contract extended gains for second day and last traded 0.78% higher at Rs14,408 per 10 grams at 2:25pm, after hitting a high of Rs14,465 earlier.
Gold prices rose as the slump in equity markets renewed concerns of the economic slowdown, leading to an increase in demand for safe haven investment.
“Even a weak rupee is affecting demand,” said Satish Bansal, director with MD Overseas Ltd.
A weak rupee makes the dollar-quoted gold expensive.
The Indian rupee fell more than 1% on fears that foreigners may withdraw funds as local stocks fell sharply, with sentiment also weakened by broad gains in the dollar versus other currencies.
Traders said any price correction could revive demand again due to festivals and weddings later in the month.
“At $850 (an ounce) we should see some demand,” said Bansal.
Weddings will start from mid-April and Akshaya Tritiya, which falls on 27 April, is the second biggest gold-buying festival after Dhanteras.