India gold price drop fails to bolster demand

Gold futures in India, the world's biggest consumer, eased on Thursday afternoon due to a rebound in the rupee, though demand in local spot market remained weak as buyers were seeking further correction, dealers said.

The most-active gold for December delivery on the Multi Commodity Exchange (MCX) was 0.57% lower at Rs 28,615 per 10 grams at 3:41 p.m. The contract earlier this month hit a record high of Rs 29,212.

The rupee, which plays an important role in determining the landed cost of the dollar-quoted yellow metal, gained in afternoon trade on Thursday on account of dollar selling from corporates and hopes that steps announced by the central bank could boost dollar inflows.

"Traders think prices are too high. They are waiting for correction. Demand from jewelers was also weak," said a Mumbai-based dealer with a private bank dealing in bullion.

The wedding season -- traditionally a moment for splurging on gold -- is currently underway in India, but so far it has failed to bolster demand substantially.

India gold demand, which recorded a fall of 20% in the September quarter, could rise in the last quarter and surpass the 1,000 tonnes demand mark in 2011, according to the World Gold Council figures.