MUMBAI 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)