January 27, 2014 / 12:47 PM / 4 years ago

Indian gold seen extending gains past 2-month high

MUMBAI (Reuters) - Gold futures in India are likely to trade higher this week, to extend their highest level in two months, buoyed by weakness in the rupee, though subdued activity in the physical market could keep the upside limited.

An employee shows gold bangles to a customer at jewellery showroom at a market in Mumbai November 1, 2013. REUTERS/Danish Siddiqui/Files

The actively traded gold contract for December delivery on the Multi Commodity Exchange (MCX) was 0.62 percent higher at 29,703 rupees per 10 grams, after hitting a high of 29,849 rupees, a level last seen on November 20.

“A weaker rupee should continue to support gold and COMEX could continue to trade sideways, so we are long on gold on MCX,” Navneet Damani, associate vice-president, Motilal Oswal Commodities.

The rupee, which breached the 63 to a dollar mark on Monday, plays an important role in determining the landed cost of the dollar-quoted yellow metal.

Gold demand in the physical market will continue to remain subdued due to government restrictions on supply for the domestic market and a record 10 percent import duty.

The silver contract for April delivery on the MCX was 0.69 percent higher at 45,000 rupees per kg.

“Silver would also be supported by the depreciating rupee, on the MCX, 44,700 looks to be an attractive level to go long,” said Damani.

Reporting by Siddesh Mayenkar; Editing by Anupama Dwivedi

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