MUMBAI Demand for gold in India, the world's biggest consumer of the precious metal, dropped on Friday as local prices rose tracking overseas markets and on a weak rupee.
The key June contract was 0.66 per cent up at Rs 27,092 per 10 gram on the Multi Commodity Exchange (MCX) at 0936 GMT, after hitting a one-week low of Rs 26,365 on Wednesday.
"Demand is very price-sensitive. The general perception among jewellers is prices will come down. That's why whenever prices go above Rs 27,000, demand is slowing," said a Mumbai-based dealer with a private bullion importing bank.
"Jewellers bought a lot of gold last month when prices fell below Rs 26,000. Now, they are interested in only bargain-buying," the dealer said.
Indians celebrate Akshaya Tritiya in the third week of May, a time considered auspicious to buy gold, while the current wedding season continues until July.
The rupee, which plays an important role in determining the landed cost of dollar quoted yellow metal, fell on Friday.
In the overseas market, gold rose as a cut in interest rates by the European Central Bank and US Federal Reserve's decision to stick to its stimulus programme burnished bullion's appeal as a hedge against inflation.
Silver for May delivery on the MCX was 1.10 per cent higher at Rs 45,031 per kg.
