Mumbai: India gold extended gains on Wednesday afternoon, deterring physical buyers from making fresh purchases, even though the rupee acted in support, dealers said.
“There are no buyers... it was the same yesterday,” said a dealer with a state-run bullion dealing bank.
The most-traded August contract on the Multi Commodity Exchange (MCX) was 0.18% higher at Rs18,698 per 10 grams, after gaining 0.6% in the previous session.
Gold prices held firm as the euro steadied near a two-week high against the dollar, but traders said rallying stock markets and receding risk aversion could cap the upside.
The Indian rupee hit its highest level in four weeks tracking gains in the domestic sharemarket on the back of a return in risk appetite globally and also boosted by gains in other regional peers.
A strong rupee makes the dollar-quoted asset cheaper.
“We saw good buying below $1,220 (an ounce) levels... probably that’s when they will think of buying,” said another dealer with a private bank.
The onset of monsoons have dented demand in the world’s key buyer as rural India, which consumes about 65 percent of the yellow metal, divert savings to buy seed and other farm imputs.
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.