UPDATE 1-India gold demand steady ahead of festival

(Updates to trends in the physical market)

* Spot gold up at $864.65 an ounce XAU=

* U.S. crude up at $117.33 a barrel CLc1

* Rupee stronger at 40.58 per dollar INR=IN

* U.S. ISM non-manufacturing index at 7:30 p.m. <MI/DIARY>

MUMBAI, May 5 (Reuters) - India's gold demand was good on Monday even though prices edged up on bargain hunting and firm crude oil prices, as an important festival forced traders to shop, dealers said.

"People are feeling these are the lowest prices before Akshaya Tritiya and therefore they are buying," said Chanda Venkatesh, a large trader in Hyderabad.

Akshaya Tritiya, a festival when many Hindus buy precious metals with the belief it will give them lasting prosperity, falls on Wednesday and Thursday.

Gold prices rebounded as investors snapped up the metal after a four-month low last week, brought about by some signs of improvement in the outlook for the U.S. economy.