August 29, 2011 / 8:23 AM / 8 years ago

India gold snaps 3-day gains; triggers physical buying

A saleswoman arranges gold jewellery inside a showroom in Kolkata September 29, 2010. REUTERS/Rupak De Chowdhuri/Files

MUMBAI (Reuters) - Gold snapped a three-day gaining streak on Monday following similar trend globally. A strong rupee also made the dollar-quoted yellow metal cheaper, triggering a slight pick-up in physical demand ahead of key festivals.

* At 1:14 p.m., the most-active gold for October delivery on the Multi Commodity Exchange (MCX) was trading 1.95 percent lower at 27,099 rupees per 10 grams

* Global spot gold fell more than 1 percent, reversing a rally of 3.2 percent in the previous session, as investors, faced with uncertainties over the U.S. Federal Reserve’s stimulus plans, decided to take some money off the table.

* The rupee strengthened, supported by a sharp rise in local shares, Asian peers and gains in the euro, with corporate dollar sales, possibly from a large domestic engineering conglomerate, also aiding.

* The rupee plays an important role in determining the landed cost of the yellow metal, which is quoted in dollars.

* A price dip attracted physical buying from traders, who were on the sidelines.

* “Demand has improved in the last few days,” said a dealer with a private-run bullion importing bank in Mumbai, adding premiums are steady at $1.1/1.4 over London prices.

* India’s wedding and festival season demand will gain pace and peak in October before tapering off in December.

Reporting by Siddesh Mayenkar; Editing by Rajesh Pandathil

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