Mumbai: India gold demand stayed weak on Thursday as record international prices kept traders at bay in the middle of the festive season, dealers said.
“Gold is at a record now so market is very dull. Market will take time to digest the $30 (an ounce) spurt seen in prices,” said Pinakin Vyas, chief manager-treasury, IndusInd Bank in Mumbai.
International gold prices, which guides the domestic market, rose above $1,055 an ounce, remaining at record highs as fund buying and new investor cash flooded the market, with a weaker dollar giving extra support.
“There would be an initial psychological barrier even though rupee is supportive for traders,” said Vyas.
The Indian rupee was close to fresh one-year highs on Thursday afternoon, rising for a fifth consecutive day, boosted by broad dollar sales and gains in the local sharemarket. A strong rupee makes the dollar-quoted asset cheaper.
Dealers said a slight ease in prices could bring back appetite as traders sought to replenish stocks for festivals.
“Every one needs a correction in prices,” said Princeson Jose, director with Prince Jewellery, which is focussed on south India.
India, which accounts for more than 20% of the global demand for gold jewellery, is in the midst of a festival season which peaks with Diwali on 17 October, when weddings usually take place, pushing up the demand for jewellery.
India’s gold imports in September provisionally fell 30%, the smallest year-on-year decline in five months, as steady prices and the festival season attracted more buyers.