MUMBAI (Reuters) - Gold traders in India, the world’s biggest buyer of the metal, tried clearing off old stocks even as the yellow metal extended losses to hit its lowest level in more than five months weighed by a stronger rupee.
The weddings and festivals season has started in India, but the federal government plans to restrict gold buying by announcing more measures in addition to a 50 percent hike in import duty to keep a lid on its bloating current account deficit.
Traders had accumulated stocks, when the finance minister hinted of a duty hike on January 2, and later raised the duty on January 21.
The actively traded gold contract for April delivery on the Multi Commodity Exchange (MCX) was 0.17 percent lower at 30,549 rupees per 10 grams as of 2:59 p.m., after hitting a low of 30,487 rupees, a level last seen on August. 20.
The rupee, which hit the highest level in more than three-and-a-half-months, plays an important role in determining the landed cost of the dollar-quoted yellow metal.
“Not many deals are happening as market has to clear the old stocks, which could finish this week,” said a dealer with a state-run bullion importing bank in Mumbai.
However, in the overseas markets, gold ticked up, but failed to climb above a recent narrow trading range as mostly upbeat U.S. data took some shine off the precious metal, which withers when economic recovery gains traction.
Silver contract for March delivery was 0.42 percent lower at 58,177 rupees per kg.
Reporting by Siddesh Mayenkar; Editing by G.Ram Mohan