Gold demand improves; supply remains tight
Gold demand in India improved on Wednesday, responding to correction in overseas prices, but supplies remained constrained due to restrictions on imports.
The most-active gold contract for December delivery was 0.99 percent lower at Rs 30,110 per 10 gram at 4.42 pm on the Multi Commodity Exchange (MCX).
"Jewellers are trying to replenish inventory at lower levels but supplies are limited," said Harshad Ajmera, the proprietor of JJ Gold House, a wholesaler in Kolkata.
"Suppliers are seeking very high premiums over London prices," said Ajmera, adding many jewellers were not ready to pay such high prices.
Overseas gold rose after hitting a four-week trough in the previous session, although prices seemed poised to test further lows as fresh uncertainty over the fate of U.S. stimulus measures dented bullion's appeal as a hedge against inflation.
India celebrated Dhanteras, the biggest gold buying festival, and Diwali earlier this month, when scarcity of the yellow metal and higher prices pushed consumers to buy silver and diamond jewellery.
The wedding season is underway in the world's biggest consumer of gold.
The rupee rose after hitting a nine-week low of 63.90 to the dollar earlier in the day. A strong rupee makes imports of gold and silver cheaper.
The silver contract for December delivery was 1.11 percent lower at Rs 47,220 per kg on the MCX.
Copyright: Thomson Reuters 2013