July 23, 2008 / 9:31 AM / in 11 years

India gold dips, sales heavy "like good old days"

MUMBAI (Reuters) - Indian gold fell in tandem with foreign markets, breaking below the psychological 13,000 rupees per 10 grams mark, prompting heavy buying by traders and jewellers, stocking up for the upcoming season, dealers said.

Gold bars are seen in a jewellery shop in Lucknow in this January 10, 2008 file photo. REUTERS/Pawan Kumar/Files

“Its like the good old days,” said one dealer in a large bank. “We are seeing this kind of sales after months... stocks are running low.”

Foreign gold, that guides the local market, fell to a two-week low with crude oil extending its down trend on worries the U.S. consumption may fall.

Gold closely tracks crude oil as the latter signals inflation, while the metal negates it.

A stronger rupee against the dollar further eased prices in the local market as most of the metal in India is imported and paid for in the U.S. currency.

“People started buying yesterday as prices got close to 13,000 rupees and are still buying at every fall,” said Ajay Singh, proprietor of Kiran Jewellers, a large wholesaler in Jaipur.

Singh said most of his clients fear prices may start to climb again and were therefore buying in large amounts.

India’s busy season for gold is about a month away when festivals and weddings will encourage purchasing of gold.

The dealer in the bank said his clients expected prices to fall to $925 an ounce.

“At that level there will be a lot more buying,” the dealer said.

Following was the price of .995 gold in the spot market in rupees per 10 grams at 1:30 p.m. :

Bank Wednesday Tuesday

==================================================

Scotia 12,980 13,550

Following are gold prices in rupees per 10 grams on the Multi Commodity Exchange of India Ltd. at 2:20 p.m. :

Contract Current price Net change

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Aug 12,795 -279

Oct 12,892 -280

0 : 0
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