India's gold demand fades as prices harden

A salesman arranges gold necklaces at a jewellery shop in New Delhi October 10, 2005.

MUMBAI (Reuters) - India's low-key gold demand faded on Wednesday with prices strengthening above the psychological 10,000 rupees per 10 grams mark and traders moving to the sidelines awaiting dips, dealers said.

"Demand for gold is poor..." said Satish Bansal of M.D. Overseas Ltd, a large precious metals importer in New Delhi.

The demand seen for gold earlier this week below the $800 an ounce level too "was not that great," Bansal said.

A dealer in a private bank in Mumbai said there were few advance orders in the $790-795 an ounce range.

Overseas gold, that guides local prices firmed up after scaling $800 an ounce the previous day amid expectations of a rate cut in the U.S. next week.

But year-end winding down kept gold from rising much, making physical gold traders expect prices to fall.

A wholesaler in Ahmedabad, Dipen Mandalia of LKS Bullion (Import & Export) Pvt Ltd, said the local market was discounted by around 50 rupees per 10 grams over what the banks were quoting.

Scrap jewellery sales and bars have been discounting the local market as prices above 10,000 rupees are seen as good for taking profits.