Gold hits record high; spot demand moderate

Gold hits record high; spot demand moderate

Mumbai: Gold demand in India, the world’s biggest buyer, was moderate on Monday after the prices in the local market rose 2% to a record high tracking firmness in the world market and due to a weak rupee, dealers said.

At 3:57pm, the October contract on the Multi Commodity Exchange was up 1.74% at 28,273 per 10 grams, after hitting a record high of 28,355 earlier in the day.

The contract has risen over 20% since the beginning of August.

“Demand was normal. People were buying despite the record high prices," said T.K. Chandiran, managing director with Coimbatore-based KTM Jewellery.

“Though most people are buying jewellery, sales of coins and bars have also risen."

International gold prices rose back above $1,900 an ounce on Monday as expectations grew that the United States could implement a further round of monetary easing after Friday’s weak payrolls data, while concerns over the euro zone debt crisis resurfaced.

The Indian rupee stayed weak in afternoon trades on Monday as the dollar gained overseas with investors seeking safe-haven assets after bleak jobs data on Friday cemented view the United States might be slipping back into a recession.

The rupee plays an important role in determining the landed cost of the yellow metal, which is quoted in dollars.

India’s wedding and festival season demand will gain pace and peak in October before tapering off in December.

“Festival demand is going to slow down if prices remained above 28,000," Chandiran said.