India gold buying continues; premiums edge up

A customer looks in a mirror after wearing a gold earring inside a jewellery shop in Hyderabad September 8, 2009.

MUMBAI (Reuters) - India gold buying edged up on Tuesday afternoon as prices steadied, pushing premiums higher, with traders awaiting clear direction ahead of a slew of data from the U.S., dealers said.

"There were a few deals at $1,340-1,341 (an ounce), they all want to stock up for festivals," said a dealer with a state-run bullion importing bank in Mumbai.

International gold was trading almost steady at $1,338.15/1,338.90 an ounce at 1:05 p.m., as against the previous close of $1,338/1,339, up 1.2 percent from its over two-week low of $1,315.09 hit on Oct. 22.

"People are still unsure on the price direction. I have plenty of orders at $1,319-1,320," said another dealer with a private bank.

A raft of data including third-quarter U.S. growth later in the day and clues on prospects of more monetary easing in the FOMC meeting next week, could impact dollar and gold.

Traders and dealers said gold premiums rose a tad on delay in shipments as suppliers lagged in meeting festival demand from the world's biggest consumer of bullion.

"Premiums have gone up by 20-30 cents to $1.10 an ounce, as shipments are getting delayed by a couple of days. However, there is no panic on supply side," said Pinakin Vyas, assistant vice-president treasury with IndusInd Bank.

India, the world's biggest consumer of the yellow metal, is in the middle of the festival season, with Dhanteras in November, when jewellers register highest sales in the year. Weddings also take place in the festival season.

State-run Indian trader MMTC Ltd expects to import more than 200 tonnes of gold in the current fiscal year to March 2011 on good demand seen in the current festival season despite high prices, its chairman said.

(Reporting by Siddesh Mayenkar; Editing by Sunil Nair)