Gold demand in India sluggish as price hardens

Demand was muted as there isn't any festival in the short-term to lure buyers

Gold prices in India, one of the world's leading consumers, edged higher on Wednesday on a weak rupee, keeping demand muted as there wasn't any festival in the short-term to lure buyers.

The most-active gold contract for August delivery on the Multi Commodity Exchange (MCX) was up 0.31% at Rs 29,563 per 10 grams by 6 p.m.

The rupee, which closed down 0.2% on Wednesday, plays an important role in determining the landed cost of the dollar-quoted yellow metal.

International gold held near two-week highs on Wednesday and was set for its second successive weekly gain, thanks to a modest decline in the dollar that may sharpen investor appetite for the metal.

"Buyers are not comfortable with the current price. Jewellers, investors all are waiting for correction," said a Mumbai-based dealer with a private bank dealing in bullion.

"And no one is in a hurry. The wedding season is almost over. There is no festival in the short term."

Poor rainfall in most parts of the country is also weighing on sentiments as monsoon rains are vital to incomes in rural areas, which contribute to 60% of gold imports, dealers said.