Gold demand weak, traders wait for bigger falls

Last Updated: Mon, Jul 08, 2013 13:17 hrs
A shopkeeper displays gold jewellery inside his showroom in Jammu

Gold demand from traders in India, the world's biggest buyer of the metal, remained subdued on Monday, waiting for a further price dip, as the yellow metal consolidated in recent range.

"Demand has turned weak, and there is difficulty in getting supplies," said Harshad Ajmera, proprietor of JJ Gold House in Kolkata, adding there could be further demand, if prices fall below 25,500 rupees, about 2 percent lower from current levels.

The waiting period has reduced to 1-2 days compared to a prompt delivery before the ban on consignment imports, Ajmera said.

Most of the supplies are met by state-run trading agencies like MMTC, State Trading Corp, and PEC, along with Scotia Bank, while other private and public banks are waiting for guidelines from the central bank on imports on cash basis.

Gold imports into India declined about 81 percent on month to 31.5 tonnes in June after the government hiked import duty and stopped consignment imports, but demand could rise in coming months, creating problems for a government battling a record high trade deficit.

Gold prices on the Multi Commodity Exchange (MCX) were supported by firm overseas leads and a rupee, which traded near its record low.

The actively traded gold for August delivery on the Multi Commodity Exchange (MCX) was 0.06 percent higher at 26,050 rupees per 10 grams.

Silver contract for September delivery was flat at 40,300 rupees per kg.

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