Gold drops; spot demand up in festive season

Gold drops; spot demand up in festive season

New Delhi: Gold prices declined in India, the world’s biggest consumer, on Wednesday reflecting a fall in the global market, and boosting demand during the key festival season, dealers said.

The most-active gold for December delivery on the Multi Commodity Exchange (MCX) was 0.5% lower at Rs25,880 per 10 grams at 3:01 pm, after hitting a high of Rs26,260 earlier in the day.

International spot gold prices fell more-than 1% on Wednesday as gains in stock markets diverted some interest from the precious metal, with investors still wary over its longer-term direction after recent sharp volatility.

The rupee reversed most early gains in afternoon trade on Wednesday, dragged by choppy domestic equities and dollar buying by some custodian banks for their customers.

The rupee affects the landed cost of gold, whose global price is quoted in dollars.

“Retail demand has improved due to price fall. Tomorrow is a key day. We may see good demand due to price fall," said a dealer at a state-run bank dealing in bullion.

Indians will celebrate Dussera festival on Thursday, when gold buying is considered auspicious by Indians.

Physical buying of gold continues as jewellers have been building stock ahead of the marriage season and Diwali festival, said a dealer with a Mumbai based private bank dealing in bullion.