Gold importers in India, the world's biggest consumer, stepped up purchases in small quantities ahead of major festivals as prices hovered near their lowest in three weeks, weighed by a stronger rupee
At 2.50 p.m., the most-active gold for October delivery on the Multi Commodity Exchange (MCX) was 0.34% down at Rs 31,241 per 10 grams, after hitting a low of 31,218 rupees, nearing a level last seen in early September.
Gold prices have fallen due to the sharp appreciation in the rupee, which was near a five-month high. The rupee plays an important role in determining the landed cost of the dollar-quoted yellow metal.
"There has been some demand over the past few days as the rupee is very much in favour," said a dealer with a private bullion-importing bank in Mumbai. "Demand will materialise further, if the rupee strengthens more."
The festival and wedding season is underway in India, and will continue till November, before tapering off in December.
Gold imports to India are likely to fall by as much as 26%, or by 200 to 250 tonnes, in 2012 as record high prices hit consumer budgets.
Silver traded flat as pressure from a stronger rupee was offset by slightly higher overseas markets.
Silver for December delivery on the MCX was 0.11% lower at Rs 62,988 per kg.