MUMBAI: Gold prices fell further on Friday to stay near their lowest level in a month, weighed by a stronger rupee amid flat overseas markets, prompting importers to stock up the yellow metal for the wedding season. Silver also declined.
The wedding season in the country, the world's biggest buyer of gold, started this week and will continue until May. Festivals also take place during this period.
The most-active Gold for February delivery on the Multi Commodity Exchange ( MCX) hit a low of 30,610 rupees per 10 grams, a level last seen on Dec. 20. The contract was trading 0.36 percent lower at 30,646 rupees at 0817 GMT.
"This morning, rupee gave good support for bullion customers ... People who have stocked are eyeing the benefit of customs duty hike," said a dealer with a private bank dealing in bullion in Mumbai.
The country witnessed a huge surge in imports of gold in the first week of January, when the finance minister hinted at a hike in import duty from the current 4 per cent. The rupee has been appreciating since Jan. 8 on the back of a slew of measures taken by the government, such as partial de-regulation of diesel prices.
A strong rupee makes the dollar-quoted yellow metal cheaper for local holders.
"We are likely to see the same challenges facing the Indian market, with local buyers at the mercy of the rupee's direction against the dollar, and amid the constant threat of government intervention," said Joni Teves from UBS.
Imports may fall by 25 percent this year if, as expected, the government again raises the duty on the precious metal, a trade body head said on Thursday.
Silver for March delivery was 0.33 percent lower at 59,415 rupees per kg.
