Gold loses lustre for Indian customers

Gold has lost its lustre among Indian customers due to its rising prices.

International spot gold, which guides the domestic market, has continued its upwards trend in recent weeks. Bullion remains boosted by its safe haven status amidst the uncertain economic outlook.

On Tuesday, gold was trading at Rs 15,200 per ten grams in India as compared to Rs 15,527 in the previous session

Although the price took a slight dip, it is still well above the rate of Rs 13,000 seen in January 2009.

The higher prices have made Indian consumers reluctant to open their wallets.

"Earlier the rates of gold were less and it was easy to buy. But now the rates are high and during the marriage season, people feel it is difficult to buy gold. There is also a fluctuation in the rates; we can only afford to buy gold if the rates come down and stabilise," said Vasantha, a customer.

On Wednesday, in early trade on the Asian markets gold steadied to around $1,075 per ounce, after closing at $1,076.10 in the previous session on Wall Street.

It is this kind of fluctuation that has got the jewellers worried.

"I can say one thing, in short, the reason the gold price is affected is because of the price variations on the multi-commodity exchanges and the variations in the global economy and the US dollar. I can easily say that this is what is affecting the prices," said Prakash, manager of Lalitha Jewellery.

Although the gold price still remains below the record high of $1,227 hit in December 2009, traders in India are eagerly awaiting price declines.

A dip in the price on the domestic market is predicted, aided by a strong rupee, which makes the dollar-quoted asset cheaper. India is the world's largest importer of gold, accounting for about 20 percent of global demand.