MUMBAI (Reuters) - India's gold prices softened on Friday following foreign markets, but demand was dull after major festivals earlier in the week that saw the peak of retail sales, dealers said. "The market is in a holiday mood but demand may pick up next week," said Ketan Shroff, director of Pushpak Bullions Pvt Ltd, a trader in Mumbai. Foreign gold that guides the local market slipped more than 1 percent and braced for its biggest monthly decline in more than two decades as crude oil prices fell on demand worries and the dollar strengthened against the euro. In the local market, a slightly stronger rupee against the dollar also dragged gold prices down. The exchange rate of the rupee affects gold prices as most of India's gold is imported and paid for in the U.S. currency. Retail sales also slowed down but a retailer said weddings in the next few months would bring shoppers back. "The wedding purchases may start in about a fortnight," said Sanjeev Agarwal at Reva Corp Ltd, a jewellery chain based in Mumbai. Agarwal said sub 12,000 rupees per 10 grams levels were good for buyers, though they would like to see it stable under that psychological mark for some duration.

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