Gold prices fall, long weekend spurs demand

MUMBAI Mon Mar 24, 2008 2:35pm IST

A shopkeeper displays a gold necklace at a jewellery shop in Agartala, October 18, 2007. REUTERS/Jayanta Dey

A shopkeeper displays a gold necklace at a jewellery shop in Agartala, October 18, 2007.

Credit: Reuters/Jayanta Dey

Related Topics

MUMBAI (Reuters) - India's gold demand was up on Monday after a 9 percent drop from last week's all-time high encouraged people to buy moderate quantities of the metal, dealers and traders said.

A long weekend owing to religious holidays also led to quick purchases as buyers needed to replenish their supplies, traders said.

"Demand is specially good as the market was inactive ahead of Holi," said Pankaj Agarwal of Brijwasi Traders & Bullions Pvt Ltd in Lucknow.

Many banks and businesses were closed toward the end of last week for Good Friday, Id and Holi.

Overseas gold prices, that guide Indian markets, fell as the dollar strengthened and crude oil cooled off falling below $100 a barrel.

Gold generally has an inverse relation with the dollar as the two compete for investors' wealth but the metal usually follows crude oil as the latter stokes inflation, while gold busts it.

Traders were also buying to take advantage of an arbitrage opportunity between spot and futures, which is about 100 rupees currently, a dealer at a large private bank said.

Demand can intensify if prices stay stable, Agarwal said.

"If it stays like this, many more people who are waiting for further falls, will jump into the market," he said.

India's busy season for gold will continue till the end of May that would bring a steady flow of buyers to jewellery shops. Lower prices will encourage them to buy more, traders said.

FILED UNDER:

Economic Pulse

REUTERS SHOWCASE

Nifty Above 8,600

Nifty Above 8,600

Nifty hits record high above 8,600; state-run lenders gain  Full Article 

Indian in Iraq

Indian in Iraq

India says no contact with 39 men held by Islamic State in Iraq.  Full Article 

Sahara Issue

Sahara Issue

Sahara looks to raise $650 million loan to fund bail.  Full Article 

Bhopal Tragedy

Bhopal Tragedy

Bhopal's toxic legacy lives on, 30 years after industrial disaster.  Full Article 

Essar Group

Essar Group

Exclusive - Essar's planned oil-for-steel deal tests Iran sanctions  Full Article 

Islamic Fund

Islamic Fund

India gets new Islamic equity fund but debt market still off-limits  Full Article 

Fiscal Deficit

Fiscal Deficit

April-October fiscal deficit nears 90 pct of full-year target  Full Article 

Oil Prices

Oil Prices

Oil hits new four-year low post OPEC as glut looms  Full Article 

Gold Imports

Gold Imports

India eases gold import rule in surprise move.  Full Article 

Reuters India Mobile

Reuters India Mobile

Get the latest news on the go. Visit Reuters India on your mobile device  Full Coverage