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Higher gold prices trigger selling; summer demand tepid
SINGAPORE/MUMBAI (Reuters) - Selling in Asia's physical gold market could pick up as prices advance towards $1,580 an ounce, but trading is likely to remain dull as long as there is no clear direction for prices during the summer lull.
Spot gold dropped to below $1,567 in the previous session, and prompted some purchases, though the buying did not last long, dealers said.
"People are buying and selling when prices move ten or twenty dollars -- they buy at $1,560-$1,570 level and sell to take profit at $1,580," said a Singapore-based dealer.
"As we remain range-bound, people are not going to be very hungry for physical materials."
Gold prices have been trading in a $100 range above $1,530 for about two months. It stood at $1,579.16 at 0701 GMT.
In Hong Kong, premiums were quoted in the range of $1 to $1.50 an ounce above London prices, dealers said.
In Singapore, premiums were little changed from a week earlier, at 80 cents to $1.
STRONG YEN CURBS SCRAP SELLING
The yen rose to its highest against the dollar since early June on Thursday, making local gold prices unattractive for investors interested in selling scrap for cash, a Tokyo-based trader said.
"With prices stagnating and a strong yen, the scenario is not too convincing for sellers," he said.
In India, which was the world's largest gold consumer until late 2011, gold demand usually slackens during the monsoon season from June to September.
Monsoon rains, vital to agricultural yields and income in the rural areas which constitute 60 percent of India's gold demand, were so far 22 percent below average for the time of the year.
"Looking at the current scenario of monsoon, I don't expect much pick-up from here," said Harshad Ajmera, proprietor of JJ Gold House, a wholesaler in eastern city of Kolkata.
India's gold imports fell by more than a half in the June quarter and could slide by a third in the next three months as prices inflated by a weak rupee and a 4 percent import duty encourage traders to use scrap, a Reuters poll showed.
"We are still seeing slightly good demand after Chaturthi (September festival), but overall demand should be down on year," said Raju Pendurkar, a partner at RG Pendurkar in Sangli in Maharasthra.
Festivals will start in India in August and continue till November, weddings also take place during this period.
Market participants are watching for signs of imminent monetary stimulus measures from the U.S. Federal Reserve, after the central bank's chief Ben Bernanke dropped few hints during a two-day Congressional testimony.
(Editing by Miral Fahmy)
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