India gold demand modest; festival near end

Enlarge Photo A worker shows gold biscuits at a precious metals refinery in Mumbai in this March...

Thu, May 8 02:49 PM

MUMBAI (Reuters) - India's gold demand remained modest overall on Thursday, with some retail sales for Akshaya Tritiya festival making up for little wholesale demand, dealers said.

"Ideally wholesale demand should have been good as gold has been more or less stable," said a dealer in a large private bank. "But the rupee's volatility has kept traders from buying."

The dealer, whose bank is also a large seller of gold coins, said retail sales were moderate, lesser than last year.

Overseas gold prices were little changed as the metal faced opposing pulls from a firm crude oil that supported it and a strong dollar that capped the rise.

Gold generally moves in tandem with crude oil as the latter signals inflation, while gold busts it. But it usually has an inverse relationship with the dollar, a rival for investment.

In the local market, the rupee was at its lowest in more than a year against the dollar, firming up gold prices, as most of the metal is imported and paid for in the U.S. currency.

"The general impression for a person standing at the shop is that people are buying gold just symbolically for Akshaya Tritiya," said Daman Prakash Jain, a large bullion wholesaler in Chennai.

Sales volumes for Akshaya Tritiya festival looked lower on year, he added.

India's busy season for gold sales is set to taper off in a few weeks, but would pick up again for the festivals starting from September.

Following was the price of .995 gold in the spot market in rupees per 10 grams at 1:10 p.m. :

Bank Thursday Wednesday

================================================

Scotia 11,800 11,761

Following are gold prices in rupees per 10 grams on the Multi Commodity Exchange of India Ltd. at 2:11 p.m. :

Contract Current price Net change

===============================================

June 11,651 23

August 11,704 20

Inside News

Editor's picks