Gold importers in India sprang back into action, picking up bargains in the peak wedding season, as prices fell to their lowest level in nearly a week, dragged by a stronger rupee and weak global markets.
The rupee, which traded stronger on Thursday, plays an important role in determining the landed cost of the dollar-quoted yellow metal. Gold tumbled 1% in the global market in stop-loss selling, after the Federal Reserve's announcement of a fresh round of bond buying.
The actively traded gold for February delivery on the Multi Commodity Exchange (MCX) was 0.75% lower at Rs 31,163 per 10 grams, after hitting a low of Rs 31,091, the cheapest since December 7.
"Volumes are good as rupee has appreciated, and gold is facing correction after FOMC," said a dealer with a Mumbai-based private bank importing bullion, adding "If rates remain at Rs 31,000, physical activity will continue."
The wedding season, which started in September and peaked last month, continues until early January. Gold is an essential gift item during this season in India, the world's largest buyer of the metal.
The Federal Reserve announced the plan to purchase $45 billion in longer-term Treasuries each month on top of the $40 billion monthly buying of mortgage-backed securities, as expected, but set inflation and unemployment threshold for exit strategy.
Silver for March traded 1.59% lower at Rs 62,218 per kg, after hitting a low of Rs 62,028, a level not seen after December 7.
