July 2, 2012 / 8:46 AM / 5 years ago

Indian physical gold buyers retreat, rupee eyed

MUMBAI, July 2 (Reuters) - Physical buyers of gold from
India retreated as the rupee depreciated on Monday even as
prices stayed in the vicinity of its lowest level in two weeks.
Traders also eyed the progress of monsoon rains, which is vital
to rural gold demand.
    * At 0828 GMT, the most-active gold for August delivery
 on the Multi Commodity Exchange (MCX) was 0.13 percent
higher at 29,710 rupees per 10 grams. The contract struck its
lowest level in two weeks of 29,457 rupees on Friday.
    * "Deals are very very slow now," said a dealer with a
foreign bank supplying gold to India, adding that though there
were deals on Friday "all went quiet as someone had switched off
the light" after rupee slid. 
    * The rupee, which depreciated after a stronger opening on
Monday morning, plays an important role in determining the
landed cost of the dollar-quoted yellow metal. 
    * "We expect demand to remain decent near recent lows for
now, but that would quickly disappear if INR weakness returns,"
UBS said in a note to clients, adding the rupee continues to be
the "main driver" for physical demand from India.
    * Rural areas, which contribute to 60 percent of the gold
demand, depends on monsoon rains for better farm productivity,
yields and profits.
    * Silver traded a tad higher following the yellow metal.
    * Silver for July delivery on the MCX was 0.41
percent higher at 52,199 rupees per kg.
    *  At 1:15 p.m., following were the prices in rupees quoted
by HDFC Bank in the spot market :     
                         Monday      Friday 
    ========================================== 
    Gold .999/10 grams   29,904      30,060 
    Silver .999/kg       54,101      54,152 
     
    At 1:58 p.m., following were the prices in rupees on the  
Multi Commodity Exchange of India Ltd <0#MAU:>: 
    Contract        Current price     Net change  
    ============================================= 
    Aug gold        29,702             +37  
    July silver     52,55             +268

 (Reporting by Siddesh Mayenkar; Editing by Jijo Jacob)

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