Gold price falls to three-week low,rupee fall cuts physical demand

The most-active gold for August delivery on MCX was 0.29 per cent lower at 26,790 rupees per 10 grams.

Indian gold extended losses on Friday to hit their lowest level in three weeks,but a weaker rupee limited the downside in prices,keeping away physical importers amid tight supplies.

The most-active gold for August delivery on the Multi Commodity Exchange (MCX) was 0.29 percent lower at 26,790 rupees per 10 grams. It earlier hit a low of 26,727 rupees,a level last seen on May 30.

A weaker rupee kept the downside in prices limited. The currency plays an important role in determining the landed cost of the dollar-quoted yellow metal.

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“The market is quiet. There is no demand due to the rupee. The picture will be clear only after August,” said Suresh Hundia,president emeritus,Bombay Bullion Association.

Demand offtake revives in August as the festivals and weddings season starts.

Gold imports into India,the world’s biggest buyer of the metal,fell from an average of $135 million per day in the first half of May to $36 million in the second half,Finance Minister P. Chidambaram said last week.

India has ruled out a blanket ban on gold imports or any increase in customs duty from the current 8 percent. Reliance on Friday abruptly halted gold sales and investments in its gold-backed funds.

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Silver for July delivery on the MCX was 0.68 percent lower at 41,025 rupees per kilogram.

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