India gold steady; physical buying muted

MUMBAI Aug 11 (Reuters) - India gold futures were steady above 26,000 rupees on Thursday afternoon as support from a weaker rupee offset a decline in the overseas markets, while physical trading was a 'little muted'.

* The most-active gold for October delivery MAUc1 on the Multi Commodity Exchange (MCX) was 0.02 percent higher at 26,610 rupees per 10 grams at 4:02 p.m., near the record high of 26,457 rupees struck in the last session.

* The Indian rupee fell, weighed by oil importers' demand for dollars and weak domestic shares, with movements in the euro eyed in the backdrop of debt worries in the region. [INR/]

* The rupee plays an important role in determining the landed cost of the yellow metal, which is quoted in dollars.

* Overseas gold fell 1 percent as buyers took a breather after earlier taking the market up to record highs, with a decision by the CME Group to raise margins on COMEX gold futures taking some of the heat out of appetite for the metal. [GOL/]

* Demand was muted as traders got accustomed to the keenly watched level.

* "I have covered for 150 kgs... it's not a bad thing considering it is just five hours of trade and gold is trading above 26,000 rupees," said a dealer with a state-run bullion importing bank.

* Gold demand from India, the world's biggest buyer of the yellow metal, will gain pace in coming weeks on the back of wedding and festival demand.

At 1:15 p.m., following were the prices in rupees being quoted by HDFC Bank in the spot market INBULL03:

Thursday Wednesday

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Gold .999/10 grams 26,525 25,985

Silver .999/kg 60,000 58,710

At 4:03 p.m., following were prices (in rupees) on the Multi Commodity Exchange of India Ltd. <0#MAU:>:

Contract Current price Net change

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Oct gold 26,216 +12

Sept silver 58,834 -469