Tuesday, February 9, 2010

Gold demand abates; price falls eyed

Gold demand abated on Tuesday afternoon after picking up in the previous session as traders awaited price declines, with a strong rupee aiding sentiment, dealers said.

"Demand is not as much as it was in the last two days of last week, when prices fell. A lot of buying positions got initiated both in physical as well as on forwards at $1,050-1,060 (an ounce)," said a dealer with a state-run bullion dealing bank.

International spot gold, which guides the domestic market, was trading 1,069.15/1,069.95 an ounce at 2:41 p.m. as against the previous close of $1,062.80/1,063.60 an ounce.

"Traders want gold to fall below $1,040 an ounce," said another dealer with a private bank.

The rupee was at 46.675 per dollar at 2:41 p.m., from its previous close of 46.83/84, tracking mostly stronger Asian peers and on gains in domestic shares.

A strong rupee makes the dollar-quoted asset cheaper. India has imported 35-40 tonnes of gold during January 1-27, up from 9.8 tonnes in the whole of the same month last year, the head of a trade body and bank dealers said.

Traders are trying to stock up in anticipation of India's wedding season, which begins in April, when demand for the yellow metal peaks.

Source: Economic times