February 5, 2013 / 11:28 AM / 5 years ago

Gold buyers wait for below support price levels

MUMBAI (Reuters) - Gold buying in India remained subdued, with negligible stocks of the yellow metal bought before the tax hike, while consumers waited for a price correction below support levels.

* Weddings and festive season have started in India, the world’s biggest buyer of the metal, but the 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.

* Traders had accumulated stocks, when the finance minister hinted of a duty hike on January 2, and later raised the duty on January 21.

* “Activity is happening, but not in a huge way after yesterday’s rebound. Prices are holding the 30,000 rupees level and the market is expecting a correction below the support level, triggered by shift from gold to currencies and equities,” said a dealer with a private bullion importing bank in Mumbai.

* The actively traded gold contract for April delivery on the Multi Commodity Exchange (MCX) was 0.03 percent lower 30,771 rupees per 10 grams.

* A slightly stronger rupee weighed on prices of the yellow metal. The rupee plays an important role in determining the landed cost of the dollar-quoted yellow metal.

* Silver contract for March delivery on the MCX was 0.21 percent higher at 58,543 rupees per kg.

Reporting by Siddesh Mayenkar; Editing by Anand Basu

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