India's local gold demand turns slack

A shopkeeper displays gold jewellery inside his shop in Jammu in this October 2008 file photo. India's domestic gold demand continued to trickle in on Friday as prices ruled below the key psychological level of 13,000 rupees, dealers said.

MUMBAI (Reuters) - India's domestic gold demand turned slack on Monday after low sales last week, as prices again rose above the 13,000-rupees mark, dealers said.

"Again, demand has turned dull as price shot up on Friday," said Pinakin Vyaas, chief manager-treasury with IndusInd Bank, in Mumbai, adding there are no enquiries as well amid the wedding season.

Traders are also not interested in buying gold due to a lack of cash as business has taken a beating because of the slowdown, Vyaas added.

Meanwhile, dealers said local gold was available cheaper by 180-200 rupees, further crimping demand.

Wholesale gold demand picked up last week after days of lull as prices briefly moved below 13,000 rupees as traders stocked the yellow metal for the wedding season.

The benchmark gold February contract traded at 13,136 rupees per 10 grams at 1:59 p.m.. It had fallen to a low of 12,731 rupees on Thursday.

Traders are now looking at 12,800-13,000 rupees or $820 (an ounce) levels in order to buy, Vyaas added.

Retail demand may see some recovery only if prices stabilise below 12,500 (rupees levels), said Kailash Mosun, a partner with Jaipur-based JKJ & Sons Jewellers.