Gold prices fall from one-week high on strong rupee

Last Updated: Thu, Jan 17, 2013 09:43 hrs

Gold importers in India continued to stock up the yellow metal for weddings as prices fell from the highest level in a week after the rupee strengthened. Silver also fell from its one-month high.

The wedding season in India, the world's biggest buyer of the metal, is slated to start later this week and will continue until May. Festivals also take place during this period. The federal government has hinted at further increasing the import duty on gold from the current 4 percent.

"Good number of deals are happening today as rupee has appreciated ... there was no buying or enquiries yesterday," said a dealer with a state-run bullion importing bank in Mumbai.

The most-active gold for February delivery on the Multi Commodity Exchange (MCX) was 0.54 percent lower at 30,725 rupees per 10 grams at 3:05 p.m., weighed by a stronger rupee.

The rupee rose on Thursday after the country's oil minister said the government would allow oil marketing companies to set diesel prices. The local currency plays an important role in determining the landed cost of the dollar-quoted yellow metal.

In the overseas market, gold traded steady as investors, concerned about the duration of ultra-loose monetary policy, refrained from betting big.

Silver for March delivery on the MCX was 0.83 percent lower at 59,221 rupees per kg, easing from the previous day's one-month high of 59,787 rupees, a level last seen on December 20.

More from Sify: