Moneycontrol
Oct 18, 2011 03:39 PM IST | Source: CNBC-TV18

India gold falls more, weak rupee caps downside

India gold futures extended losses on Tuesday afternoon in tandem with foreign markets, although a weaker rupee kept the downside limited.


India gold futures extended losses on Tuesday afternoon in tandem with foreign markets, although a weaker rupee kept the downside limited.


The most-active gold for December delivery on the Multi Commodity Exchange was 0.53% lower at Rs 26,682 per 10 grams.


Global gold prices eased slightly, retreating with risk assets after China's economic growth eased to its slowest in more than two years and Germany cautioned against expectations of a quick cure to euro zone's debt crisis.


International gold was down at USD 1,659.59/1,661.00 an ounce, down from the previous close of USD 1,670.90/1,671.65.


The rupee weakened dragged by weak domestic equities, a lacklustre euro and some dollar demand from domestic oil companies.


Physical traders continued to book deals, though in low quantities, ahead of a slew of festivals later in the month. "There are some deals at below USD 1,660 (an ounce)," said a dealer with state-run bullion importing bank in Mumbai.


"Demand is good for the upcoming festival season and market needs a heavy correction before going high," said Chanda Venkatesh, managing director with CapsGold, a bullion merchant in Hyderabad.


Gold demand in India, the world's largest bullion buyer, will be strong in October-December, a traditional time for festivals and weddings, despite high inflation that eats into savings and multiple growth-choking central bank rates hikes.


Meanwhile Kunal Shah, head of research - commodities, Nirmal Bang Commodities citing views to CNBC-TV18 about metals space said, "Copper looks weak. One should initiate short position in copper at around Rs 364 with a stop loss placed above Rs 368. One can expect prices to reflow and test levels of Rs 355.


Also watch the accompanying video.

(With inputs from Reuters)

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