UPDATE 1-India gold demand low, buyers await dips

Mon May 26, 2008 1:44pm IST

(Updates to trends in the physical market)

* Spot gold up at $926.90 an ounce XAU=

* London Brent crude up at $132.30 a barrel LCOc1

* Rupee stronger at 42.66 per dollar INR=IN

MUMBAI, May 26 (Reuters) - India's gold demand was sluggish on Monday as customers stayed away from the markets due to high prices, dealers said.

"The demand is almost nil. Prices are still ruling higher and hardly any buyers are coming," said Dipen Mandelia, director of Ahmedabad-based LKS Bullion Import and Export Pvt Ltd.

The benchmark June contract on the Multi Commodity Exchange of India has risen about 400 rupees in the last one week due to rising crude oil prices and a firm overseas market.

High oil prices increase fears of inflation encouraging investors to buy the precious metal as a hedge.

The busy festive and marriage seasons have ended and some fresh demand would only come after the monsoon, when harvesting starts, said a dealer with a large private bank.

Following was the price being quoted by a bullion bank in rupees per 10 grams for .995 gold at 1:15 p.m. INBULL03:

Bank Monday Friday

================================================

Axis bank 12,873 12,811

Following are gold prices in rupees per 10 grams on the Multi Commodity Exchange of India Ltd. at 1:41 p.m. <0#MAU:>:

Contract Current price Net change

======================================================

June 12,737 3

Aug 12,756 6 (Reporting by Debiprasad Nayak, editing by Harish Nambiar)

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