India gold futures up; seen facing opposing pulls

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

Wed, May 14 11:46 AM

MUMBAI (Reuters) - India's gold futures were slightly higher on Wednesday, with a weaker rupee making imports more expensive.

Also all of India's 700 tonnes of annual gold requirements are imported, according to industry estimates, making the local price of the metal vulnerable to the exchange rate.

"Gold's downside could be capped because of the rupee," said Somnath Dey, in-charge - metals and energy at Religare Commodities Ltd.

On the other hand, a decline in crude oil from its record-high struck on Tuesday may pull gold futures lower, analysts said. The yellow metal generally moves in tandem with oil as the latter signals inflation while the metal is a good hedge against it.

"Gold may remain sluggish" after crude fell, said Shailendra Kumar, head of research at Sharekhan Commodities Pvt Ltd.

June gold on the Multi Commodity Exchange of India Ltd (MCX) is seen trading within 11,700 rupees and 11,950 rupees per 10 grams, Religare's Dey said.

Following are gold prices in rupees per 10 grams on the Multi Commodity Exchange of India Ltd. at 11:42 a.m. :

Contract Current price Net change

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

June 11,856 28

August 11,908 25

For a technical look at international spot gold, double click www.reutersindia.net/gold.htm)

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