Gold off early highs on global markets

Gold off early highs on global markets

Mumbai: Gold came off early highs to trade flat, following a similar trend in overseas markets, although a weaker rupee kept the downside in prices limited, analysts said on Wednesday.

The most-active gold for October delivery on the Multi Commodity Exchange (MCX) was trading 0.11% higher at 28,264 per 10 grams, reversing from an early high of 28,525.

The rupee slid to its lowest in nearly two years, as worries Europe’s debt problems may snowball into a banking crisis roiled global markets and pushed investors to the dollar’s perceived safety.

The rupee plays an important role in determining the landed cost of the dollar-quoted yellow metal.

Physical buying continued its retreat as traders awaited price falls and stability in rupee to stock for the upcoming festivals and weddings.

“Demand has dropped to some extend due to rupee’s weakness," said a dealer with a private gold importing bank in Mumbai.

India is the biggest consumer of bullion followed by China. Wedding and festival demand is expected to gain pace and peak in October and November before tapering off in December.

“Demand from India also improved, although it remains below normal levels as buyers prefer prices sub-$1800," said UBS in its daily note.