Gold rises; physical buying remains weak

Gold rises; physical buying remains weak

Mumbai: India gold rose tracking overseas leads on Thursday afternoon, and domestic buying remained weak in a seasonally lean period, with traders eyeing the movement in rupee for direction, dealers said.

“At the retail level, they are offering discounts of Rs200-300 (per 10 grams)... but no one is interested," said a dealer with a state-run bank in Mumbai.

The most-active gold August contract was trading 0.30% higher at Rs18,685 per 10 grams at 2:23pm, after hitting a high of Rs18,745 earlier. Prices are still below the all-time high of Rs19,198 struck last week.

“We are selling, but in very minimal quantity, like we did only 50 grams since morning at 1,233/1,234 (an ounce)," said another dealer with a private bank.

International gold was trading at $1,232.10/1,232.90 an ounce as against the previous close of $1,229.60/1,233.60 on Wednesday.

Gold firmed in Europe as investors worried about sovereign debt levels in the euro zone sought out the metal as a safe haven, with losses on the equity markets pointing to softer appetite for risk.

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

The Indian rupee continued to trade largely steady tracking a choppy domestic sharemarket and the dollar’s gains against major currencies.

The onset of monsoon typically crimps gold demand in India as rural households, which account for 65% of total gold buying, slows as farmers use funds to buy seeds and fertiliser.

Gold imports into India may fall to less than 15 tonnes from 29.9 tonnes a year earlier as near-record prices and the onset of monsoon dent demand, a trade body official said.