Mumbai: Demand for gold in India, one of the world’s top buyers, continued to remain sluggish on Thursday on a volatile rupee, with a nationwide strike call by opposition parties to protest petrol price rise further denting retail demand.
The most-active June delivery on the Multi Commodity Exchange was unchanged at Rs 29,117 per 10 grams by 1253 GMT.
“Rupee is very volatile. It is keeping the price (of gold) higher in the local market despite a drop in overseas prices,” said a Mumbai-based dealer with a state-run bank dealing in bullion.
The rupee plays an important role in determining the landed cost of the dollar-quoted yellow metal. It gained as much as 55.73 to the dollar, after having hit a record low of 56.52 earlier in the session.
“Most jewellery shops were closed today. Retail demand was weak,” the dealer said, adding he expects the weakness to continue in next two months with the onset of monsoon rains.
Demand usually drops between June and mid-August when there are no major festivals.
Global gold edged higher on Thursday as expectations of an Irish vote in favour of Europe’s fiscal pact lifted the euro, but this month’s sharp drop in the single currency kept the metal on track for its worst May performance in 30 years.
Gold demand in India is likely to moderate in 2012 as higher inflation trims disposable income at a time prices are stubbornly high on a weak rupee, the head of the World Gold Council in the country said earlier this month.