Gold rises 1%; festivals prop up demand

Gold rises 1%; festivals prop up demand

Mumbai: Gold demand in India, the world’s biggest consumer, remained healthy on Wednesday as consumers were buying for key festival despite a percent rise that pushed up local prices to the highest level in nearly three weeks, dealers said.

The most-active gold for December delivery on the Multi Commodity Exchange (MCX) was 0.89% higher at 26,900 per 10 grams.

The contract earlier hit a high of 26,955, the highest level for the near-month contract since 23 September.

“Jewellers were active. Retail demand is there for jewellery along with coins and small bars," said a dealer with a Mumbai-based private bank trading the bullion.

Gold demand is likely to gain pace and peak with Diwali and Dhanteras festivals slated later in the month. Weddings also take place during this period.

“Demand is also higher as gold prices, which saw correction recently, may rise sharply again as gold has emerged as a safe heaven due to European debt crisis," said Murukesh Kumar, an analyst at JRG Wealth Management.

International spot gold prices rose 1 percent on Wednesday as the euro climbed to a three-week high against the dollar, and after the Slovak parliament’s rejection of a plan to expand the bloc’s rescue fund stoked concerns over the euro zone debt crisis.

The rupee, which plays an important role in determining the landed cost of the dollar-quoted yellow metal, shrugged off a sluggish start and nosed higher as a more than 1% rise in domestic equities helped raise hopes for foreign fund inflows.