Tuesday, April 1, 2008

Gold Demand Low-Key, Buyers Eye Falls

Mumbai: Gold market saw low-key buying on Monday as prices hardened taking cues from overseas markets, where continued fund inflows helped the metal rebound from its recent lows.

"Today it is a little quiet compared to what we saw last week," said a dealer in a large private bank. "But people are eyeing levels below 12,000 rupees per 10 grams."

Overseas gold ticked up amid signs of investors returning to the market after a severe fall to a month's low earlier in March.

The metal was supported by bargain hunters using gold as a safe haven asset amid uncertainity in other asset classes.

Gold was down 9 per cent from its all time high level on March 17 at $1,030.80 an ounce.

"There is caution in the market, but at least some buying has started, said Samir Shah of Riddisiddhi Bullions Ltd, a large Mumbai-based wholesaler.

"But demand can really be strong if foreign prices fall closer to $900."

India's wedding season is still on, keeping demand at jewellery shops alive, though the price rally seen since the start of the year has muted buying.

There has been widespread sale of old gold to pay for new, or simply for profit taking, dealers in Zaveri Bazaar have said.

However, on Monday, scrap sales were down that meant traders were buying more of imported gold rather than the cheaper, recycled gold derived from scrap.

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