Mumbai: Gold buying recoiled on Tuesday afternoon as prices extended gains for a second session to breach the $1,400 an ounce mark, though a stronger rupee kept the upside in domestic prices limited, dealers said.
“I did a few deals yesterday at $1,390, though there are enquiries at $1,400, nothing is materialising,” said a dealer with a state-run bullion importing bank in Mumbai.
International spot gold breached above $1,400 for the first time in a week, riding on dollar weakness and buoyed by buying interest from China, but trading volumes remained thin ahead of the year end.
“Deals would come down further as we are nearing the year end. They (jewellers) would all like to trim their positions during this part of the year,” said the first dealer.
“We have some orders $1,395 (an ounce),” said another dealer with a state-run bullion dealing bank.
Rupee strengthened to its highest level in nearly a week on Tuesday boosted by gains in other Asian currencies, but choppy domestic shares limited any sharp gains.
Rupee plays an important role in determining the landed cost of the yellow metal, which is quoted in dollars.
The wedding season that follows Dhanteras and Diwali festivals is underway in India and will continue till end-December, sustaining the demand for the yellow metal.
The country accounts for 20% of global demand for gold jewellery.
In July-September, India imported 214 tonnes of gold, up 21.6 percent on year, the World Gold Council said.