Mumbai: India gold traders continued to pick up bargains on Friday afternoon triggered by falling prices as they braced for a second round of festivals starting August and bought dollars to fulfil import commitments, weighing on the Indian rupee.
“We priced in more than 300 kgs of gold since yesterday evening..., everybody is coming, be it domestic trader, exporter,” said a official with a state-run bank bullion dealing bank.
“Gold prices are down, so there is some gold-related dollar buying in the market,” said Vikas Chittiprolu, a senior foreign exchange dealer with state-run Andhra Bank.
The most-active August contract was trading 0.46% lower at Rs18,447 per 10 grams at 2:25pm, after losing more than 1.5% in the previous session, prompting gold traders to lock in the opportunity.
But prices are still down from their all-time high of Rs19,198 struck on 8 June, when safe-haven buying in the overseas market supported the yellow metal.
Scotia Mocatta quoted gold at 18,402 rupees, as against the previous close of Rs18,813.
Gold is a dollar-denominated asset, and the rupee plays an important role in determining the landed cost of the yellow metal.
The rupee slipped after a higher start as traders grabbed an arbitrage opportunity in the futures and forward markets, while gold-related demand for dollars also weighed on the Indian unit.
The onset of monsoon typically crimps gold demand in India as rural households, which account for 65 percent of total gold buying, use funds to buy seeds and fertiliser.
India’s gold imports in June are likely to fall, for the third straight month, by 75 percent from 29.9 tonnes a year ago as record prices dented demand in the world’s largest market for the metal, the head of Bombay Bullion Association said. See
However, a series of festivals starting from August could revive demand for the yellow metal, traders said.
“Both jewellers and investors, who were waiting for gold to fall are buying in good quantity for upcoming festivals,” said Harshad Ajmera, proprietor of Kolkata-based wholesaler JJ Gold House, which offered to sell gold at Rs18,400.