India gold prices firm, demand stays low

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

Thu, May 15 02:18 PM

MUMBAI (Reuters) - India's gold prices firmed up on Thursday afternoon as the dollar weakened suddenly after strong German gross domestic product data, keeping demand subdued with the season gradually drawing to a close, dealers said.

Buyers also waited to see if the rupee, that had weakened against the dollar to a thirteen-month low the previous day, would recover further, helping ease local gold prices.

"People do expect the rupee's depreciation to correct, so they are waiting," said Prithviraj Kothari, director of Riddisiddhi Bullions Ltd, a large wholesaler in Mumbai.

The rupee's value against the dollar affects the landed cost of gold as most of the metal is imported and paid for in dollars.

Retail demand was "normal" in Bangalore, said Rajesh Mehta, chairman of Rajesh Exports Ltd, which has a jewellery retail chain.

"This is the fag end of the season, but moderate buying is there as the prices have been stable for some time," Mehta said.

But only a fall below 11,000 rupees per 10 grams could induce heavy buying, Mehta added.

India's gold demand may see a lull from next month and revive in September, when festivals commence.

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

Bank Thursday Wednesday

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

ICICI 12,047 11,989

Following are gold prices in rupees per 10 grams on the Multi Commodity Exchange of India Ltd. at 2:09 p.m. :

Contract Current price Net change

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

June 11,827 9

August 11,869 -2

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