Analysts and traders said retail buyers and jewellers have postponed purchase amid hopes that prices will ease in the absence of any new global tension.
The metal has fallen nearly 2 per cent in the last two months despite the rupee turning weak against the dollar.
They said the summit between US President Donald Trump and North Korean leader Kim Jong-un last week, which reduced geopolitical risks, has also lowered demand for gold, which is seen as a safe haven.
“There is no geopolitical tension at present that may trigger to make gold a safe haven asset,” said Surendra Mehta, secretary at India Bullion & Jewellers Association. “Investors are getting better returns from equity markets and dollar trading. There is no reason for investors to pick up gold as an asset class at the moment.” Gold was trading at ?30,965 per 10 gm at Mumbai’s Zaveri Bazar on Tuesday, a 1.9 per cent drop from ?31,565 on April 19.
Though spot gold in the international market rose 0.2 per cent to $ 1,280.29 an ounce on Tuesday, traders in India said this marginal rise will be shortlived and the metal may drop to $ 1,272 in 7-10 days.
“This is not the best period for gold demand,” said Shekhar Bhandari, business head-global transaction and precious metals at Kotak Mahindra Bank. “Moreover, to the Indian customer gold price in rupee term is not as attractive as the price in dollar, as rupee has weakened against dollar.”
Traders said retail demand has not picked up despite ‘Adhik Maas’ coming to an end on June
13. Adhik Maas is considered inauspicious and people avoid buying gold or property during this period. In Zaveri Bazar, gold was available at a discount of $ 4-5 per ounce. “From the beginning of this month, gold is being available at a discount,” said Mukesh Kothari, director at RiddiSiddhi Bullions.