February 20, 2013 / 10:53 AM / 5 years ago

Gold demand edges up as prices drop; strike hurts

MUMBAI (Reuters) - Gold demand in India, the world’s biggest consumer of the metal, edged higher on Wednesday after prices fell near their lowest level in more than six months, although a nationwide strike limited the revival in demand.

As of 4.03 pm, the most active gold contract for April delivery on the Multi Commodity Exchange (MCX) was 0.46 percent lower at 29,914 rupees per 10 grams, after falling to 29,909 rupees earlier.

The futures hit a six-month low of 29,794 rupees on January 31.

“The demand is coming at the current level as prices are trading below the key psychological level of 30,000 rupees,” said a Mumbai-based dealer with a private bank dealing in bullion.

“Had it been a normal trading day, we could have seen more demand. The strike is hurting jewellers’ participation.”

Many Indian banks were closed and public transport disrupted on Wednesday because of a strike by trade unions protesting against high prices, but financial markets were open.

The rupee, which plays an important role in determining the landed cost of the dollar-quoted yellow metal, rose on Wednesday.

India’s domestic bond and currency markets are closed on Tuesday for a banking holiday.

The trade ministry has recommended suspension of gold jewellery imports from Thailand, said a trade ministry statement issued on Wednesday.

Globally, gold struggled to rise significantly above $1,600 an ounce on Wednesday, as ebbing interest in the safe-haven metal amid signs of an improving global economic outlook offset purchases by bargain hunters in Asia.

The silver contract for March delivery on the MCX was 0.37 percent lower at 54,965 rupees per kg.

Reporting by Rajendra Jadhav; Editing by Prateek Chatterjee

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