ET:Gold eases from 1-week high; bargain buying in play
MUMBAI: Gold eased from its highest level in a week on Tuesday in line with global markets, triggering bargain buying by physical traders waiting to stock up for the wedding season.
The government has been trying to limit imports to keep a lid on record current account deficit, and the economic advisory council expects the country to import $45 billion tonnes of the yellow metal in the year to March 2014.
At 0913 GMT, the actively traded gold for June delivery on the Multi Commodity Exchange (MCX) was 133 rupees lower at 26,230 rupees per 10 grams after hitting a high of 26,542 rupees on Monday, a level last seen on April 15.
Overseas gold dropped more than 1 per cent, as investors in exchange-traded funds continued to liquidate positions, while a stronger dollar also weighed on prices.
A weaker rupee, however, kept the price drop limited. The rupee plays an important role in determining the landed cost of the dollar-quoted yellow metal.
"Demand is crazy here. What we hear from clients is that customers are flocking to showrooms," said a dealer with a foreign bank importing bullion.
Gold premiums in the country rose sharply to up to $10 an ounce on London prices, the level last seen in 2010.
"Everyone wants material today. People are ready to pay anything for today's delivery, but there's lag of 8-10 days," said the dealer.
The country will celebrate Akshaya Tritiya festival next month, a time considered auspicious to buy gold. Also, the wedding season continues until July.
Silver was down, taking cues from the yellow metal. Silver for May delivery on the MCX was 986 rupees lower at 42,701 rupees per kilogram.
