Gold demand up by 10% in India in October

KOLKATA: A drop in local gold prices to a three-week low has prompted a wave of buying in India from the beginning of this week, that marks the end of inauspicious shradh paksh. Bullion dealers and jewellers are stocking gold at this price for the upcoming festive season. Gold traders say that in October there has been an increase in demand by 10% compared to the previous month which may go up further if there is a correction in prices going ahead.

Mohit Kamboj, president of Bombay Bullion Association, said: "In the quarter July-September, India had imported 157 tonnes of gold. We are expecting an import figure of 250 tonnes in the quarter October- December on account of festive season and wedding demand. A fall in prices will be advantageous for the trade."

Global gold inched up on Wednesday, rising for a second day with the support of a stronger euro as concerns about the bloc's debt crisis eased after Moody's affirmed Spain's rating and German business sentiment improved. Gold has moved up to $ 1,750 an ounce. The rupee, which strengthened on Wednesday, capped the upside in prices.

Indian gold prices are generally determined by international prices. During festival seasons, local demand and currency movement also influence the prices to some extent. The rupee plays an important role in determining the landed cost of the dollar-quoted yellow metal.