"Potential buyers are adopting a wait-and-see attitude until the impact of sanctions become clear," the Dubai trader said. He added that a continued rupee decline could also boost demand if Indians flee to gold as a safe haven.

Traders said demand for jewellery in Dubai's Goldsouk was also being disrupted by the end of the school year in Gulf Arab states, which is keeping potential buyers at home withtheir children who are studying for exams. "Gulf Arabs, who are potential jewellery buyers, are not coming to Dubai now because of year-end school exams," said another trader.