Gold prices rebound; jewellers stocking up for festivals

Last Updated: Thu, Oct 03, 2013 09:54 hrs
A salesman poses with gold necklace at a jewellery shop in Jammu

Gold futures rebounded on Thursday from their lowest level in two weeks, tracking gains in overseas prices, though a strong rupee limited the upside.

Despite the price rise, demand improved slightly as jewellers were seen placing orders for the peak festive season.

At 2:57 p.m., the benchmark October gold contract the Multi Commodity Exchange (MCX) was 1.21 percent higher at 29,886 rupees per 10 grams. It hit a low of 29,352 rupees on Tuesday, a level last seen on September 18.

"Some jewellers are placing orders as they have very thin inventory. They want supplies for Dussehra and Diwali," said a dealer with a private importing bank in Mumbai.

India will celebrate the Hindu festivals of Dussehra in the third week of October and Diwali in the first week of November, a period when buying gold is considered auspicious.

Some banks, which are primary dealers of bullion, re-started imports after the customs department gave its approval to some lots.

Imports had virtually stopped after the so-called 80/20 principle, which tied exports with domestic consumption, creating confusion among government officials, and prompting the commerce ministry to call a meeting to break the deadlock.

Overseas, gold held onto sharp overnight gains in Asian trading on Thursday as weak U.S. economic data and a partial government shutdown raised hopes that the Federal Reserve would stick to its bullion-friendly stimulus for longer.

The rupee rose 1 percent on Thursday. A strong rupee makes gold imports cheaper.

Indian markets were closed on Wednesday for a national holiday.

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