Gold demand weak on inauspicious time to buy

Gold demand in India remained sluggish on Monday as people held off buying during year-end holidays and an inauspicious month for purchases provided a further deterrent, dealers said.

* The most-active February gold contract on the Multi Commodity Exchange was 0.13 percent lower at 27,760 rupees per 10 grams by 2:25 p.m., due to an upside in the rupee.

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* "Traditionally the current period remains a lean season. In rural areas people avoid buying due to Khar Mass, while in urban areas people spend the vacation with family," said Daman Prakash Rathod, director with Chennai-based wholesaler MNC Bullion. "Even jewellers go on vacation."

* Khar Mass is a month in the Hindu calendar from December 16 to January 14 which is considered inauspicious for gold buying and starting new ventures.

* "Unless prices move dramatically demand will remain weak," Rathod said.

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* All U.S. commodity and financial markets were closed on Monday for the Christmas holiday. International spot gold was flat in very thin volume at $1,604 an ounce.

* The rupee, which plays an important role in determining the landed cost of dollar-quoted gold, was at 52.77/78 to the dollar from Friday's close of 52.9600/9675 on hopes stronger economic news from the United States could make investors more confident and support investment in emerging markets.

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* A Reuters poll of 20 hedge fund managers, economists and traders showed international spot gold prices are expected to fall below $1,500 an ounce over the next three months and they are unlikely to retest September's all-time highs until later 2012 at the earliest.