Mumbai: Local demand for gold stayed slack on Monday as the rupee hit a two-month low making the imported yellow metal expensive, dealers said.
“A weak rupee is driving buyers away,” said a dealer with a private bank in Mumbai. “They would rather wait for favourable prices.”
The most-active August contract was 0.35% higher at Rs14,551 per 10 grams at 1:26pm, taking support from a weak rupee.
The Indian rupee extended losses after falling the most in four months last week, as banks bought dollars in anticipation of foreign fund outflows from local shares.
Dealers said a drop in prices to Rs14,000 level could spur buying interest as traders sought to stock for the upcoming festival demand.
“I have some advance orders at $900 (per ounce),” said the dealer with the private bank.
A series of festivals and auspicious days for weddings is expected to boost gold demand from August-end till the end of the year.