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Gold fall triggers buying, pushes premiums

Gold fall triggers buying, pushes premiums
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First Published: Fri, Jan 07 2011. 02 02 PM IST
Updated: Fri, Jan 07 2011. 02 02 PM IST
Mumbai: Gold extended losses on Friday to its lowest level in more than a month, in step with overseas markets, triggering an uptick in phsyical buying ahead of the harvesting season, but limited supplies pushed premiums higher, dealers said.
“We have good demand from the Southern states as harvest festival is due next week,” said a dealer with a state-run bullion importing bank.
February gold on the Multi Commodity Exchange (MCX) was 0.55% lower at Rs 20,316 per 10 grams at 2:17pm, after hitting a low of Rs 20,283, nearing a level last seen in late November.
Farmers in India harvest their rabi crop, the second in the year, and sell their produce in the market, leaving more disposable income, that finds its way to gold and other saving instruments.
International spot gold posed for a fifth consecutive day of loss, pressured by the strength in the dollar, as investors wait for a key US employment report due later in the day for clues on the health of the economy.
“Traders are coming in at regular intervals to buy. I sold 45 kgs at 1,367-1,371 (an ounce),” said another dealer with a state-run, bullion-importing bank.
A weaker rupee kept the downside in prices limited. The Indian rupee weakened tracking losses in the euro, and ahead of US non-farm payrolls data due at 6:00pm, that is expected to reinforce a recovery in the world’s largest economy and boost the dollar.
Dealers said they were unable to get timely supplies as refineries overseas were not operating in full capacity, which pushed premiums higher.
“There is a constraint in supply after the holiday season, as refineries are not in full swing, therefore they are charging an additional 20-25 cents on premiums,” said the second dealer.
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First Published: Fri, Jan 07 2011. 02 02 PM IST
More Topics: Markets | India | Gold | Commodity | Rupee |