Mumbai: Gold traded flat on Wednesday afternoon as support from record overseas markets was offset by a strong rupee, which traded at its highest level in 35 months, pushing physical traders on the sidelines, dealers said.
At 2:09pm, the most-active gold for August delivery on the Multi Commodity Exchange (MCX) was trading 0.34% higher at Rs 23,215 per 10 grams. The contract had struck a record of Rs 23,358 on 25 July.
“Demand is muted. I think festival buying will start from mid or late August,” said a dealer with a state-run bullion dealing bank in Mumbai, adding “We hope prices not accelerate with current pace.”
Overseas spot gold hit an all-time high on Wednesday, for the sixth time in two weeks, as worries grew whether the United States could avert a debt default while its two key political parties were still locked in stalemated talks to raise its debt ceiling.
The rupee climbed to its highest level in 35 months on Wednesday, tracking the euro’s gains against the dollar and stronger Asian peers.
The rupee plays an important role in determining the landed cost of the yellow metal, which is quoted in dollars.
Retail gold demand is expected to gain pace next month, when festival and wedding season start in the world’s biggest consumer of bullion.