Gold buyers throng shops for auspicious buys
MUMBAI: Buyers in India, the world's largest consumer of gold, thronged shops to buy the yellow metal to invoke prosperity for Dhanteras, the biggest gold buying festival, as prices fell for a second straight session.
Dhanteras accounts for 15-20 tonnes of gold sales, trade estimates show.
"Demand is good as today is Dhanteras, they are buying for auspicious reason," said an official with a Mumbai-based private bank, which deals in gold coins.
The most-traded December gold contract on the Multi Commodity Exchange (MCX) extended losses for a second day weighed by a strong rupee making the dollar-quoted asset cheaper.
The contract last traded 0.65 percent lower at 15,817 rupees per 10 grams at 2:29 p.m., after losing 0.7 percent in the previous session.
India is in the midst of the festival season, with Diwali on Saturday, when consumers buy gold for auspicious reasons.
However, traders and bank officials expect a more than 50 percent drop in sales as high prices strangle demand.
"Demand is certainly better than last few weeks, but not as good as last 2 years," said Shekar Jog, a partner with Sangli-based V.S. Bullion.
"People, who used to buy 10 grams, are buying 5 grams, but they are still buying. There are alot of emotions attached to this festival," added Jog.
Traders expect physical offtake to extend till Diwali.
"This buying would continue till Diwali. People have absorbed this price of 15,800-16,000 (rupees)," said Ketan Shroff, director with Pushpak Bullions, a Mumbai-based trader. "People have earned in stock markets also, so they can buy expensive gold."
India's gold imports in September provisionally fell 30 percent, the smallest year-on-year decline in five months, as steady prices and the festival season attracted more buyers.
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