Gold traders snap up bargains as prices edge lower

Gold traders snap up bargains as prices edge lower

Mumbai: Gold traders snapped bargains to meet festival demand on Wednesday afternoon as prices eased a tad tracking overseas markets, where a strong dollar weighed on the yellow metal, dealers said.

“There has been good demand from last week, I indented for 100 kgs today at $1,337 (an ounce) and 80-90 kgs on Monday," said a dealer with a Mumbai-based state-run bullion dealing bank, which sold 1 tonne last week.

At 2:02pm, gold contract on the Multi Commodity Exchange (MCX) was trading 0.21% lower at Rs19,550 per 10 grams, after hitting a low of Rs19,499.

However, a weaker rupee, which makes the dollar-quoted asset expensive, capped the downside, dealers said. “We could see more deals if rupee reverses its fall," said another dealer with a private bank.

Bank dealers witnessed better-than-expected gold sales this month as an appreciating rupee made the dollar-denominated cheaper for local buyers. On 15 October the rupee had struck its highest level in 25-½ months at 43.95 for a dollar.

India, the world’s biggest consumer of the yellow metal, is in the middle of the festival season, with Dhanteras in November, when jewellers register the highest sales in a year. Weddings also take place in the festival season.

State-run Indian trader MMTC Ltd expects to import more than 200 tonne of gold in the current fiscal year to March 2011 on good demand seen in the current festival season despite high prices, its chairman said.