Gold demand weak as strike hits retail buying

Gold demand in India was sluggish on Thursday as many jewellery shops were closed due to a nationwide strike, although the price eased in the world's biggest consuming market following a drop overseas.

Schools, shops and government offices were shut in some states as protesters blocked road and rail traffic as part of a one-day nationwide strike against sweeping economic reforms announced by the government last week.

The most-traded gold contract for October delivery was down 0.52% at Rs 31,850 per 10 grams by 4:17 p.m. It had hit a record high of Rs 32,421 last week.

"Demand was weak. Jewellery shops were closed due to the strike. Some jewellers were buying from banks, but by and large buying was dull," said a Mumbai-based dealer with a state-run bank.

"If prices fall by another Rs 700 or Rs 800  (per 10 grams), we can see significant improvement in buying."

Spot gold prices in the world market fell on Thursday as a stronger dollar and weaker oil and stock markets prompted some investors to cash in gains after the previous day's 6-1/2 month high.

The rupee, which determines the landed cost of the dollar-quoted yellow metal, eased on Thursday, restricting the downside in gold prices.

India celebrates Ganesh festival this week, which will be followed by Dussehra in October and Diwali in November. Buying gold during festivals is considered auspicious.