Gold gains as dollar drops, Indian festivals may boost demand

LONDON: Gold today climbed for the first time in three days on signs the start of festivals in India has boosted purchases as a drop in the dollar may add to demand.

The precious metal advanced by 0.8 per cent to USD 1,714.82 an ounce and silver jumped 1.2 per cent to USD 32.14 an ounce.

The festive season in India, the biggest buyer of gold, began with Dussehra yesterday and ends in November with Diwali, followed by weddings.

Indians traditionally buy gold during these months. Gold yesterday declined below USD 1,700 an ounce for the first time since September 7 as the dollar gained against the euro.

"After India's festival celebrations yesterday, physical buying is starting on a strong footing today," Edel Tully, an analyst at UBS in London said.

Brazil increased its gold reserves by 1.7 tonnes last month, to 35.3 tonnes, the first increase since December 2008, the International Monetary Fund said. Turkey's holdings increased 6.8 tonnes and Ukraine added 0.3 tonne. Turkey's bullion holdings have increased due to it accepting gold in its reserve requirements from commercial banks.