Retail gold demand up despite high prices

File photo of a woman admiring gold necklaces at a jewellery store in Chandigarh. India's retail gold demand picked up on Tuesday as consumers embraced festive season shopping despite high prices, but wholesale gold demand was negligible on firm international prices.

MUMBAI (Reuters) - India's retail gold demand picked up on Tuesday as consumers embraced festive season shopping despite high prices, but wholesale gold demand was negligible on firm international prices.

"Festive buyers are shopping even as the prices are higher as they expect the prices go up further. Besides it's a good investment option," said Rajiv Popley, director, Popley Group.

After the end of an inauspicious Shradh phase last week, India's gold buying is expected to pick up, with Dusshera festival falling this week and Diwali coming up in a few weeks time, retailers said.

However, there was little wholesale demand on firm international prices.

"The wholesale demand is negligible as gold price is touching new highs everyday," said a dealer with a large private bank.

Overseas gold was trading at $760.75 an ounce at 3:30 pm after hitting a 28-year old peak at $762.60 earlier in the day, as crude oil prices leaped to new highs on rising tension between Turkey and Iraq.

Turkey's Parliament is expected to debate a request for authorisation for an incursion into northern Iraq to deal with Kurdish militants.

Firm crude prices highlight gold's role as a hedge against oil-led inflation.

Following was the price being quoted by a bullion bank in rupees per 10 grams for .995 gold at 1:20 p.m. :

Bank Tuesday Monday

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HDFC Bank 9,844 9,773

Following are gold prices in rupees per 10 grams on the Multi Commodity Exchange of India Ltd. at 3:30 p.m. :

Contract Current price Net change

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Dec 9,708 45

Feb 9,803 44