Gold buying slows as discounted Feb contract nears expiry

MUMBAI Fri Feb 1, 2013 4:00pm IST

A goldsmith holds finished gold bangles at a workshop in Kolkata January 16, 2013. REUTERS/Rupak De Chowdhuri/Files

A goldsmith holds finished gold bangles at a workshop in Kolkata January 16, 2013.

Credit: Reuters/Rupak De Chowdhuri/Files

Related Topics

MUMBAI (Reuters) - Gold importers in India slowed purchases ahead of weddings and festivals as the February futures contract, which neared expiry, was quoted at a discount to prices of the yellow metal at banks, the primary importers of bullion.

The weddings and festivals season has started in India, the world's biggest buyer of the metal, but the federal government plans to restrict gold buying by announcing more measures in addition to a 50 percent hike in import duty to keep a lid on its bloating current account deficit.

"The market is slow. Everyone is keeping their investments on hold and looking at a discount in Ahmedabad delivery contracts. Most of the traders are waiting for expiry of the futures contract," said Ketan Shroff, director of PentaGold in Mumbai. MCX contracts are delivered in Ahmedabad due to lower local taxes in Gujarat.

Gold for February delivery on the Multi Commodity Exchange (MCX) was 0.18 percent higher at 29,924 rupees per 10 grams due to a weaker rupee, recovering from a low of 29,794 rupees in the previous session, a level last seen in August last year.

The rupee, which weakened on Friday, plays an important role in determining the landed cost of the dollar-quoted yellow metal.

The MCX February contract deliverable at Ahmedabad was available at a discount of 15,000 rupees per kilogram to the bank price. The contract will expire on February 5.

In the overseas market, gold ticked lower on Friday after recent gains prompted investors to take profits, but the metal was heading for a small weekly rise before the release of key U.S. employment data that may show a modest growth.

Silver for March delivery on the NCDEX was flat at 57,844 rupees per kg.

(Reporting by Siddesh Mayenkar; Editing by Prateek Chatterjee)

FILED UNDER:

Reuters Showcase

Land Ordinance

Land Ordinance

Modi says willing to make changes in land decree  Full Article 

Sahara Woes

Sahara Woes

SEBI cancels Sahara's portfolio management licence  Full Article 

Gold Demand

Gold Demand

India gold demand muted, eyes cut in import duty  Full Article 

Coffee's Hot

Coffee's Hot

IPO could value Cafe Coffee Day at $1 billion  Full Article 

Sahara Salaries

Sahara Salaries

Some staff say Sahara has not paid salaries for months   Full Article 

DLF Fined

DLF Fined

DLF says reviewing $8.4 million SEBI penalty  Full Article 

GM Corn

GM Corn

Monsanto says GM corn trial in final stage in India  Full Article 

Rail Budget

Rail Budget

Breakingviews - India goes back to future with $137 bln rail push  Full Article | Full Coverage 

Clean Energy

Clean Energy

India says clean energy a $160 billion opportunity over five years  Full Article 

Reuters India Mobile

Reuters India Mobile

Get the latest news on the go. Visit Reuters India on your mobile device  Full Coverage