India gold firm, traders away after overnight buys

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

MUMBAI (Reuters) - India's gold prices stayed firm on Wednesday after fresh geo-political tensions erupted in the Middle East and traders stayed away after buying for their near-term needs at a dip the previous day, dealers said.

"Yesterday there was a little bit of buying, it was reasonably okay compared to other days," said a dealer in a private bank.

The dealer was referring to gold's lowest level in more than a week near 12,700 rupees per 10 grams late the previous day that sparked some buying interest.

Overseas gold, that guides the local market, rebounded on news Iran had test-fired missiles, as that lifted the metal's safe haven appeal in times of uncertainty.

A trader in Mumbai's Zaveri Bazaar said profit taking had paused as sellers were now waiting for gold to scale 13,000 rupees again.

"There are no buyers or sellers at the moment," said Jitendra Kantilal of Jugraj Kantilal & Co in Zaveri Bazaar.

In the New Delhi market, a gap of up to 80 rupees per 10 grams existed between quotes by banks and local traders owing to the low demand, said Sanjeev Solanki, senior trader at MD Overseas.

India's lean season will be over by September when festivals and weddings increase demand for precious metals.

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

Bank Wednesday Tuesday

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Scotia 13,012 13,121

Following are gold prices in rupees per 10 grams on the Multi Commodity Exchange of India Ltd. at 2:17 p.m. :

Contract Current price Net change

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August 12,880 7

October 12,984 4