Friday, February 1, 2008

Gold Demand Low As Prices Near Highs

Mumbai: Gold demand was slack on Thursday as prices remained near record highs due to a weaker rupee and firm overseas markets, dealers said.

"The demand is quite dull as prices are going up...it will take a while for the customers to get used to these levels," said a dealer with a large private bank.

The benchmark February contract on the Multi Commodity Exchange of India (MCX) touched an all-time high of Rs 11,800 on Tuesday.

As most of the country's gold supply is imported and paid for in dollars, a weaker rupee makes gold more expensive.

Traders said scrap sales of jewellery and bars are continuing to fill the local market with supplies, easing the demand for new gold jewellery.

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India's busy season for gold is currently on as weddings are scheduled till May, but if prices continue to stay above Rs 11,000, many buyers would sell their old jewellery to pay for new, said Madan Jain of Auro Gold Jewellery Pvt. Ltd.

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