Gold prices harden, demand low

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

Fri, May 16 02:33 PM

MUMBAI (Reuters) - India's gold prices hardened on Friday as overseas markets held on to robust gains a day ago on a weaker dollar overseas, while demand remained low with the busy season coming near its close, dealers said.

"Demand is not there at all... in the local market, prices are at a discount," said Prithviraj Kothari, director of Riddisiddhi Bullions Ltd, a large Mumbai-based wholesaler.

Kothari said his company was offering gold at 12,135 rupees per 10 grams, lower than that quoted by bullion selling banks.

"Gold rates are being spiked up by the weak rupee in the local market," said a dealer in a private bank. "There are few inquiries, but nothing is materializing into orders."

Although the dollar is showing signs of weakness against the euro and yen, in the local markets it has risen to a 13-month high against the rupee following the crude oil price rally.

India's gold buying season is now almost at the end with majority of marriages and a festival over, yet small buying will continue to take place in the largest gold market of the world.

Some purchases are taking place in north India for weddings coming up in the next season, said Pankaj Agarwal of Brijwasi Traders & Bullions Pvt Ltd in Lucknow.

"People are buying because they fear gold may rise more," said Agarwal said.

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

Bank Friday Thursday

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

ICICI Bank 12,307 12,060

Following are gold prices in rupees per 10 grams on the Multi Commodity Exchange of India Ltd. at 1:43 p.m. :

Contract Current price Net change

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

June 12,149 103

August 12,191 111

(Reporting by Ruchira Singh; Editing by Ramya Venugopal)

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