Gold buying cools off after festival pick-up

Gold buying cools off after festival pick-up

Mumbai: India’s wholesale gold demand abated as prices jumped on Tuesday after picking up in the previous few sessions due to Dhanteras and Diwali, dealers and traders said.

“Consignments have dried up now, there is not much activity in the wholesale segment," said a official with a large bullion dealing private bank. “There was demand until last week."

India, the world’s largest gold consumer, celebrated Dhanteras, the biggest gold buying festivals, and Diwali, the festival of lights, when gold buying picks up for auspicious reasons.

Dhanteras accounts for 15-20 tonnes of gold sales, trade estimates show.

The December gold futures contract rose about a 1 percent on Tuesday, hitting a high of Rs15,971 per 10 grams.

Dealers said festival sales were lower compared to last year, but sentiment was boosted by a strong rupee, which made the dollar-quoted yellow metal cheaper.

“Demand was in no way in comparison to the previous year, on month they were lower by 45 percent," said a senior executive with a large foreign bank, which supplies gold to India. “ A strong rupee was aiding sentiment."

The rupee rose 0.24% over the week, and is now 12.8% above a record low of Rs52.2 per dollar hit in March. The currency has gained more than 5.5% this year.

“Demand would have been much better if gold prices were at $1,000/1,020 (an ounce)," said the official.