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Gold demand weak as buyers seek stability in rupee
September 17, 2012 / 10:13 AM / 5 years ago

Gold demand weak as buyers seek stability in rupee

MUMBAI (Reuters) - Gold demand in India, the world’s biggest consumer, was subdued on Monday as buyers waited for the rupee to stabilise before making purchases for the festive season.

Gold bars are displayed at a gold jewellery shop in Chandigarh May 8, 2012. REUTERS/Ajay Verma/Files

* The most-traded gold contract, for October delivery, was down 0.13 percent at 31,840 rupees per 10 grams by 0944 GMT, after hitting a record high of 32,421 rupees late on Thursday.

* “The sharp rise in the rupee was a surprise for buyers. They bought gold aggressively on Friday, but are now waiting for the rupee to stabilize,” said a Mumbai-based dealer with a private bank.

* The rupee rose to a four-month high in early trade on Monday in hopes of major foreign inflows after the federal government announced the opening up of the aviation and multi-brand retail sectors to overseas direct investment.

* A strong rupee makes imports of gold cheaper.

* “Buyers are not expecting prices to move higher in the world market. The market has factored in the impact of the Federal Reserve’s stimulus programme,” the dealer said.

* In the international market, spot gold eased to $1,767.59 an ounce.

* India celebrates the Ganesh festival this week, which will be followed by Dussehra in October and Diwali in November. Buying gold during festivals is considered auspicious.

Reporting by Rajendra Jadhav; Editing by Anupama Dwivedi

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