India gold demand revives slightly as prices ease

Women is seen admiring a gold necklace at a jewellery shop in Chandigarh in this October 18, 2007 file photo. India's wholesale gold market saw a flicker of a revival in demand on Wednesday as prices eased, but dealers said majority of the buyers were waiting for a fall closer to the psychological 10,000 rupees per 10 grams mark.

MUMBAI (Reuters) - India's wholesale gold market saw a flicker of a revival in demand on Wednesday as prices eased, but dealers said majority of the buyers were waiting for a fall closer to the psychological 10,000 rupees per 10 grams mark.

"There are people asking for bullion now," said Ajay Singh, proprietor of Kiran Jewellers in Jaipur, who mainly operates in the wholesale business.

"But demand will really be there if prices come down further," Singh said.

Another wholesaler in Ahmedabad said further falls could close the disparity in prices between locally sold gold compared to the freshly imported gold.

"The disparity has come down to about 30 rupees per 10 grams, where as yesterday it was around 100 rupees," said Haresh Acharya, head of bullion desk at Parker Agrochem Exports Ltd.

Acharya said if prices fall below 10,000 rupees, the scrap and bar sales, responsible for denting local prices, are likely to stop.

A dealer in a large foreign bullion bank said the interest of buyers had increased, but sales were still low as prices were still being considered as expensive.

Overseas gold lost ground tracking weakness in crude oil, but the uncertainty in the dollar's outlook continued to keep the sentiment bullish. Gold has lost about 5 percent since its recent 28-year high on Nov 7 at $845.40 an ounce.

In the local market, the rupee was stronger against the dollar and that helped ease gold prices a bit more.

Following was the price of .995 gold in the spot market in rupees per 10 grams at 1:15 p.m. :

Bank Tuesday Wednesday

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Scotia 10,440 10,735

Following are gold prices in rupees per 10 grams on the Multi Commodity Exchange of India Ltd. at 2:09 p.m. :

Contract Current price Net change

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Dec 10,259 -128

Feb 10,338 -127