Gold prices in India rose on Monday to the highest level in more than a week on a drop in rupee, but demand was subdued in the physical market where buyers were on the sidelines waiting for a correction in prices. The most-active gold for October delivery on the Multi Commodity Exchange (MCX) was up 0.45 percent at 30,168 rupees per 10 grams by 0950 GMT.
Indian rupee, which determines landed cost of imported gold, was trading lower on Monday. International spot gold edged up on Monday, extending its winning streak into a seventh session as dimming prospects for global growth support expectations of more stimulus measures from central banks around the world.
"The price rise is hurting sentiments. Buyers are uncomfortable in making purchases above 30,000 rupees. Most are waiting for a correction," said a Mumbai based dealer with a state-run bank dealing in bullion. "Even jewellers are opting to keep lower inventory. They are worried about slowing rural demand due to a drought," the dealer said. Rural areas, which depend on monsoon rains for agricultural yields and income, contribute to about 60 percent of the country's demand. Gold imports have already declined due to doubling of import duty, and the drought could further dent demand from rural areas.
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