Jewellers and traders on Monday said gold off-take was likely to be sluggish following the serial blasts in Delhi and the bullish price of the yellow metal, but the impact would, however, be minimal.
Sales on the auspicious day of Dhanteras on Sunday was lower across the country on account of prevailing high prices of gold at about Rs 6,900 per 10 gram.
Mumbai, the hub of gold purchases, is seeing sluggish sales. "Gold and silver coins did see demand on the occasion of Dhanteras but it was just about 30 per cent than last year. As for the demand for gold jewellery, it is close to nil," Suresh Hundia, director of Hundia Exports.
Traditionally, Mumbai sees a demand of 500 kg of gold coins and 2 tonne of silver coins on Dhanteras.
But this year, demand for gold coins was about 200 kg and silver coins 500 kg, Hundia added.
Rakesh Saraf, general secretary of Delhi's Karol Bagh Jewellers Association and proprietor of Delhi-based Girdhari Lal Saraf Jewellers, said, "Demand has been lower this year owing to prevailing higher prices and the business is as just 25 per cent of last year," said.
But most jewellers feel that with Delhiites flocking markets just 12 hours after the blasts, buying, whatever minimal is likely, will happen. Jewellers are also pegging hopes on the fact that most buying comes after Diwali and traditionally, Dhanteras seeing only symbolic buying.
Most market players are waiting for correction in gold prices at current levels and see it falling to about Rs 6,600 per 10 gm for buying to set in.
However, another issue of concern remains the current weakening of the rupee vis-à-vis the dollar.
The expectation of a correction, owing to long liquidation, is likely to worry market players during the week.
"If overseas funds liquidate their longs, we can expect a short-term weakness in gold," said a note from AnandRathi Securities.
Analysts expect that any significant improvement in US data to be presented on Tuesday would be negative for gold.
Gold jewellery buying during this Diwali has already been affected, following high prices.
"Though usually festive demand accounts for around 40 per cent of annual sales, this year it may not happen, with spiralling prices," said Harmesh Arora, vice-president of Bombay Bullion Association. Further, the marriage season is low this year and this too has hit buying.
"Currently the sale is at their lowest ebb-almost negligible. Overall, the market is seeing a slow down but we are hopeful that sale will pick up, if prices fall," added Hundia.