Mumbai: India gold buying picked up slightly on Monday afternoon as a strong rupee made the dollar-denominated yellow metal cheaper, dealers said.
“There is buying going around below $1,260 and at current levels,” said a dealer with a state-run bullion dealing bank in Mumbai.
The most-active August contract was trading 0.50% lower at Rs18,754 per 10 grams at 2:17pm, after hitting a low of Rs18,600, but well below the all-time high of Rs19,198 struck on 8 June.
The Indian rupee strengthened to its highest level in more than a month on Monday, boosted by hopes China will allow gradual appreciation of the yuan while the dollar’s losses against major currencies also helped.
The rupee plays a pivotal role in determining the landed cost of the yellow metal, which is quoted in dollars.
“Rupee is in supporting mode, that’s why these deals,” said another dealer with a private bullion dealing bank.
The onset of monsoon typically crimps gold demand in India as rural households, which account for 65% of total gold buying, slows as farmers use funds to buy seeds and fertiliser.
Gold imports into India may fall to less than 15 tonnes from 29.9 tonnes a year earlier as near-record prices and the onset of monsoon dent demand, a trade body official said.