Gold trades steady at one-week high on weak rupee

Last Updated: Tue, Mar 19, 2013 10:22 hrs

Gold futures stayed steady near the highest level in more than a week on Tuesday, supported by a weakening of rupee in the aftermath of a political crisis and as importers were unwilling to book the yellow metal.

India, the world's biggest buyer of the metal, has been trying to curb imports of gold to put a lid on record high current account deficit. The federal government raised the import duty on gold, which it called a dead investment, by 50 percent to 6 percent in January.

"There were a few deals in the morning, but after the political crisis rupee is not in supporting mode and local costing is a bit higher," said a dealer with a private bullion importing bank in Mumbai.

At 1.56 p.m., the actively traded gold for April delivery on the Multi Commodity Exchange (MCX) was 0.26 percent higher at 29,625 rupees per 10 grams, after hitting a high of 29,644 rupees on Monday, a level last seen on March 7.

The Indian rupee reversed early trend to trade weaker after a key regional ally pulled out of the country's ruling coalition and after the central bank issued a statement that was seen as cautious on future rate cuts.

The rupee plays an important role in determining the landed cost of the dollar-quoted yellow metal.

In the overseas market, gold hovered near a 2-1/2-week high on Tuesday, as nervousness around an upcoming vote on a levy on bank deposits in Cyprus supported safe haven interest in gold, but investors were sceptical about such support being sustained.

Silver for May delivery on the MCX was 0.25 percent higher at 54,458 rupees per kilogram.

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