Gold demand stays weak as prices hit 6-week high

Gold demand stays weak as prices hit 6-week high

Mumbai: Gold buying stayed weak for a fourth session on Monday as prices extended gains to hit its highest level in six weeks, with traders watching the rupee for direction, dealers said.

“My other centres are not active, although I saw a few from Mumbai... even prices have jumped about Rs600 (per 10 grams)," said a dealer with a state-run bullion dealing bank.

Gold futures on the Multi Commodity Exchange (MCX) extended gains to hit an over-1-month high tracking overseas markets, where a weak dollar supported the yellow metal.

The most-active October contract was trading 0.41% higher at Rs18,642 per 10 grams at 1:34 pm, after hitting a high of Rs18,645, the loftiest level since 1 July.

The rupee recouped most of its early losses by mid-morning on Monday as the domestic stock market edged up after a weak open, but losses in regional peers continued to exert downward pressure on the local unit.

The rupee plays an important role in determining the landed cost of the yellow metal, which is quoted in dollars.

Indian gold demand is set to pick up for the busy festival season, starting with Raksha Bandhan on 24 August, and extending till Dhanteras in November, the single biggest gold-buying day.

“I have 40 kgs to cover if prices fall to $1,211-1,216 an ounce and much more if it moves below $1,200," said another dealer with a private bank, which deals in bullion.