Gold demand retreats as rupee weakens

Gold demand retreats as rupee weakens

Mumbai: India gold buying retreated on Wednesday afternoon as a weak rupee made the dollar-quoted yellow metal expensive, despite a pick-up earlier in the week when prices tumbled from a five-month high.

“I did more than 150 kgs yesterday at about $1,175 (an ounce), and I have booked only 60 kgs since morning as the rupee is weak," said a dealer with a state-run bullion dealing bank in Mumbai.

International gold, which guides the domestic market, was trading at $1,170.35/1,171.15 an ounce as against the previous session close of $1,170.65/1,175.65. It struck a five-month high of $1,191.90 an ounce in the previous session.

“Still buying is not in full swing, I have many advanced orders at lower levels below $1,160 level," said another dealer from a second state-run bank.

Gold forfeited its safe-haven status to the dollar on Wednesday, continuing to give up ground after dropping sharply overnight in step with a broad sell-off in commodities and stocks.

The Indian rupee weakened to its lowest level in more than a month on Wednesday as broad dollar buying due to fears of a Greece contagion weighed on the euro and other Asian currencies.

A weaker rupee makes the dollar-priced yellow metal expensive.