Gold buyers in India trickled into shops as prices fell by about 5 percent from the all time high struck last week, and dealers said, a further dip below the psychological mark of 15,000 rupees may rekindle buying interest.
"We are witnessing some buying since yesterday," said a dealer with a state-run bank in Mumbai, adding that "a lot of traders are waiting for a fall below $950 levels."
"Buying has picked up transaction wise," said the dealer, adding "We are getting calls for the first time after gold dipped below $1,000."
The benchmark April contract traded at 15,265 rupees per 10 grams at 1:48 p.m., down about 5 percent from its all-time high of 16,040 rupees struck late last week.
A stronger rupee also made the dollar-quoted asset cheaper. The Indian rupee edged higher on Wednesday as gains in domestic shares eased concerns about outflows, but the dollar’s strength overseas, and demand from importers, prevented a sharper rise.
"Buyers are enquiring but they are eyeing the lower side," said Pinakin Vyaas, chief chief manager – treasury with IndusInd Bank in Mumbai.
"Still there is disparity between bank and local gold," said Vyaas, adding demand for imported bars would also depend on the amount of scrap sales coming in the market.
SCRAP FLOW TO EASE
Traders said the flow of scrap may ease after gold prices declined.
Scrap sales may fall slightly compared to yesterday, said an official with Jitendra Kantilal, a scrap buyer in Mumbai’s Zaveri Bazaar, who said he was buying scrap gold at 15,300 rupees.
The flow of scrap and high prices had been impacting country’s imports that slowed after strong demand in August to November last year.
Gold imports nearly halved to 400 tonnes in 2008 in India, the world largest consumer, from an annual average of around 700-800 tonnes per annum.