|Chennai||Rs. 28730.00 (1.13%)|
|Mumbai||Rs. 29740.00 (-0.13%)|
|Delhi||Rs. 29200.00 (0%)|
|Kolkata||Rs. 29350.00 (0%)|
|Kerala||Rs. 28000.00 (0%)|
|Bangalore||Rs. 28400.00 (0%)|
|Hyderabad||Rs. 28470.00 (-0.11%)|
Physical gold purchases lost steam this week as stockpiling in China and other Asian markets ahead of the Lunar New Year drew to a close and Indian buyers remained on the sidelines of the market, with ample inventory in hand.
The stockpiling began in January to satisfy demand during Lunar New Year but purchases have slowed down especially as prices were not low enough to lure buyers, traders said.
"The pre-Lunar New Year buying was quite strong, but by now a lot of the metal has already been bought," said a Hong Kong-based trader.
"The key centres are buying a little less towards the end of the month, which has more to do with the front-loading effect than anything else."
Spot gold recovered from a Monday's low of just above $1,650 an ounce to $1,666 by 0928 GMT. Though prices have fallen more than $30 from last week's peak near $1,700, buyers were unimpressed.
"We are near a recent low, but people are a little worried that prices could come off again," said a Singapore-based dealer, adding that gold premiums in Singapore remained steady at $1 to $1.20 an ounce above London prices.
Recent upbeat economic data sapped investors' interest in bullion, a safe haven investment that is attractive during times of economic distress.
Buying from India has been sluggish since the government hiked import taxes on bullion last week, although prices in the domestic market have fallen enough to lure buyers, traders said.
Gold on the Multi Commodity Exchange dropped to a more than six-month low of 30,193 rupees per 10 grams, thanks to the strength in the rupee.
The rupee rose to a one-week high against the dollar and was headed for a fourth consecutive week of gains, after the central bank cut interest rates and banks' cash reserve ratio on Tuesday.
Importers have largely shunned the international market since the announcement of the tax hike as by then they had already purchased a lot of gold.
But a retracement in global gold prices would lure Indian buyers back in the market, traders said.
"If we see prices drop to $1,640 level, we should see decent buying out of India," said the Hong Kong-based trader.
Gold market participants will watch the policy decision by the Federal Reserve later on Wednesday, as well as a key U.S. labour market report due on Friday, to gauge the pace of recovery in the world's top economy and the Fed's attitude towards monetary stimulus.
More signs of an economic recovery could dampen gold's appeal as a safe haven, although inflation concerns stoked by aggressive monetary easing may help gold stay attractive as an inflation hedge.
China, which vies with India for the status of the world's top gold consumer, will kick off a week-long Lunar New Year holiday from February 9.