Gold demand in India rose this week due to a festival and as local prices adjusted to an appreciating rupee, while higher prices kept a check on demand elsewhere in Asia.

The Gudi Padwa festival, also known as Ugadi in some parts of the country, was held earlier this week. Buying gold during festivals is considered auspicious in the world’s second-biggest market.

“Retail demand improved due to Gudi Padwa and a drop in prices,” said Mukesh Kothari, director at bullion dealer RiddiSiddhi Bullions in Mumbai.

Dealers in India were charging a premium of up to $1 an ounce this week over official domestic prices. They were charging a premium of $2.00 last week. The domestic price includes a 10 percent import tax.

The demand is likely to remain firm next month due to another festival, Akshaya Tritiya, and the start of the wedding season, Kothari said.

In the local market gold futures were trading around 28,500 rupees per 10 grams on Friday, down 1 percent from a week ago.

The Indian rupee has risen 4.8 percent against the U.S. dollar so far in 2017, partly offsetting gains in overseas gold prices.

“Jewellery demand has been good so far this year, but investment demand is still weak. Investors are more interested in the stock market,” said a Mumbai-based gold dealer with a private bank.

Source: Yahoo! Finance