India gold firm on weak rupee; demand down

Enlarge Photo Gold bars are seen in a jewellery shop in Lucknow in this January 10, 2008...

Wed, May 14 02:27 PM

MUMBAI (Reuters) - India's gold prices stayed firm on Wednesday even though overseas markets eased, as a weaker rupee supported the metal, making buyers wait for lower levels at the end of the busy season, dealers said.

Demand is "very slow because of the rupee, even though gold price (in dollars) is still in the buying range," said a dealer in a large private bank.

Gold gets expensive in India if the rupee weakens against the dollar as most of the metal is imported and priced in the U.S. currency. On Wednesday, the rupee fell to a 13-month low against the dollar.

Retail sales of gold are now on a decline with the Akshaya Tritiya festival over last week and the number of weddings slowing.

But investors could still pick up the metal if they found prices attractive, dealers said.

If prices fall to around 11,150 rupees per 10 grams, investors could buy, said Jayanti Lal of Mahavir Bullion Corp in Vijayawada.

India's busy season that started mid-January will draw to a close at the end of this month and pick up again in September when the festivals start.

Following was the price of .995 gold in the spot market in rupees per 10 grams at 1:15 p.m. :

Bank Wednesday Tuesday

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Scotia 12,026 12,057

Following are gold prices in rupees per 10 grams on the Multi Commodity Exchange of India Ltd. at 2:20 p.m. :

Contract Current price Net change

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June 11,834 6