Mumbai: Gold rose around a percent on Friday afternoon but is still heading for the biggest monthly drop since July 2010 as burgeoning festival demand has not yet been enough to counter weakness on global economic worries.
Spot volumes were lacklustre as state-run and private banks, which import majority of country’s annual gold requirement of 800-900 tonnes, were shut due to the end of the quarter when they close accounts.
The most-traded gold contract for October delivery on the Multi Commodity Exchange (MCX) was 0.82% higher at Rs 25,952 per 10 grams, after hitting a high of Rs 26,019 earlier. Gold is heading for a 4.5% fall in September, its biggest since July, 2010.
International gold prices jumped more than 1% after Germany’s approval for expanding the euro zone bailout fund offered temporary reassurance to investors, but prices are heading for their biggest monthly decline in three years.
* Traders in India continued to book deals for next week for festivals and weddings as they are expecting further price gains.
Demand for gold in India, the world’s biggest consumer of bullion, will gain pace in October and November due to a series of festivals and the peak season for marriages, before tapering off in December.
“Buying is there, but material is not available due to the bank holidays,” said Harshad Ajmera, proprietor of JJ Gold House in Kolkata. He said sales could rise by 20% if gold remains steady below Rs Rs 27,000.