Gold demand in India remained sluggish on Tuesday as jewellers were not interested in placing orders due to a depreciating rupee and as retail demand tapered after the peak festive season earlier this month.
India celebrated Dhanteras,the biggest gold buying festival,and Diwali earlier this month,when scarcity of the yellow metal and higher prices pushed consumers to buy silver and diamond jewellery.
The wedding season is underway in the world’s biggest consumer of gold.
The most-active gold contract for December delivery was 0.19 percent higher at 30,201 rupees ($474.11) per 10 gram at 0931 GMT on the Multi Commodity Exchange (MCX).
“Demand is weak. Jewellers are not comfortable at the current level due to a weak rupee. Since retail demand has gone down,they are not in a hurry to make purchases,” said a Mumbai based dealer with a private bank.
The rupee hit a two-month low on strong dollar demand from corporates. A weak rupee makes imports of gold and silver expensive.
Overseas gold hit a fresh 3-1/2-week trough below $1,300 on Tuesday as investors fretted over the timing of the U.S. Federal Reserve’s stimulus tapering,while physical demand was not strong enough to put a floor under prices.
Silver contract for December delivery was 0.48 percent lower at 48,140 rupees per kg on the MCX.