January 7, 2013 / 10:48 AM / 7 years ago

Gold prices rise on weaker rupee

A salesman arranges a gold necklace inside a gold jewellery showroom in Kochi April 16, 2012. REUTERS/Sivaram V/Files

MUMBAI (Reuters) - Gold importers in India, the world’s biggest buyer of the metal, retreated as a weaker rupee helped the yellow metal to extend gains for a second day.

The actively traded gold for February delivery on the Multi Commodity Exchange was 0.24 percent higher at 30,982 rupees per 10 grams by 2:54 p.m., after gaining 0.35 percent in the previous session.

“Deals are there but volumes are not that great as the rupee has weakened,” said a dealer with a private bullion importing bank. “Last week there were good consignments due to the talk of import duty.”

The rupee, which weakened past 55 per dollar, plays an important role in determining the landed cost of dollar-quoted yellow metal.

Worried by ballooning current account deficit, the finance minister hinted at making gold shipments more expensive, saying it was under consideration, but did not elaborate on the type of measures. India has a 4 percent import duty on gold.

The central bank also recommended restrictions on value and volumes on importing banks and agencies.

Overseas gold inched up off the previous session’s four-month low, boosted by lacklustre U.S. jobs data which supported expectations for continued monetary easing from the Federal Reserve.

Silver for March also edged 0.19 percent higher to 58,095 rupees per kg.

Reporting by Siddesh Mayenkar; Editing by Subhranshu Sahu

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