Gold demand recoils as prices near all-time high.

MUMBAI: Gold buying recoiled on Tuesday afternoon as prices neared an all-time high, dealers said. A weaker rupee also made the dollar-denominated yellow metal expensive.

"People are scared to buy at record high and they are holding back their funds now looking for levels of Rs 18,500/18,600 (per 10 grams)," said Ajay Singh, proprietor of wholesaler Kiran Jewellers. The Jaipur-based Kiran Jewellers caters to northern Indian states of Rajasthan and Uttar Pradesh.

Gold on Tuesday was at Rs 19,059 per 10 grams on the Multi Commodity Exchange, near an all-time high of Rs 19,198 struck on June 8.

"My order book is heavy on the downside below $1,220 (an ounce)," said a dealer with a state-run bank in Mumbai, which deals in bullion, adding "even rupee is not supportive".

The rupee extended its losses in the afternoon session tracking the dollar's gains versus major currencies, with mild gains in local shares failing to provide any clear direction on capital flows.

Traditionally, demand for gold in India, the world's largest consumer of bullion, is high during the festival season of September-November. Dhanteras, considered auspicious for buying gold, falls in November.

A Reuters poll has estimated India's gold import in 2010 at 504.5 tonnes, up by 24.5 tonnes from last year.

Source : economictimes.indiatimes.com