Mumbai: India’s gold market saw low demand on Wednesday even though prices softened as buyers kept away on hopes of sharp corrections, with a few having bought during the previous day’s dips, dealers said.
“Prices are slightly down so that is making people wait for bigger falls,” said Lokesh Agarwal of Brijwasi Traders and Bullions Pvt. Ltd, a large wholesaler in Lucknow.
Agarwal, who sold “bits” at the previous day’s falls, said his clients were eyeing Rs12,500 per 10g.
A dealer in a private bank in Mumbai also said clients were waiting for lower prices after buying at the dips around $964 (Rs39,042) an ounce late on Tuesday.
Traders said gold’s lofty levels were still encouraging consumers to part with their holdings to encash it or pay for new gold ornaments for weddings.
“At this time there are more sellers than buyers,” said Kapilkumar of Chokshi Arvind Jewellers, a bullion shop in Mumbai’s Zaveri Bazaar that buys gold scrap and bars to recycle it and sell to jewellers.
Scrap sales have dominated India’s bullion market since prices started rallying in November, pushing expensive imported gold to the fringes.
Kapilkumar said his buying price on Wednesday was Rs12,750 and the selling price, Rs12,770.
Traders and dealers said most of the wedding jewellery sold by retailers is being made out of recycled gold.
Standard gold (99.5% purity) dropped by Rs20 per 10g to close at Rs12,725 on the Mumbai bullion market.
Meanwhile, gold gained in other Asian markets on Wednesday on emergence of buying after the Federal Reserve announced a plan to boost financial system liquidity to ease a shortage of credit.
Gold added 72 cents, or 0.1%, to $974.02 an ounce, within 2% of its record $992.05 peak on 6 March.
However, silver fell 2 cents, or 0.1%, to $19.65 an ounce, compared with $21.23 on 6 March, the highest since 1980.
Markets have been influenced by the US Federal Reserve’s statement that it will make $200 billion available to revive lending among banks. The plan drove the Standard and Poor’s 500 Index to its biggest gain in more than five years, amid a fresh rally in Asian stocks on Wednesday.
The Fed’s announcement sent crude oil prices surging to dizzy heights, which also boosted demand for gold as a safe haven to park funds. Crude oil was near a record in Asian trading after the Fed’s declaration. Oil for April delivery in New York traded at $108.59 a barrel from a high of $109.72 on Tuesday.
The Federal Reserve had on Tuesday pledged to lend, in return for mortgage debt, $200 billion of treasuries to securities firms that trade directly with the central bank.
Bloomberg contributed to this story.