India gold seen extending gains into 3rd week

India gold futures are likely to extend gains into a third week in tandem with foreign markets and on expectations of a pick-up in off-take as the festival season peaks at home, analysts said.

"Gold is moving with riskier assets like equities. So, there is some positive optimism in equities and this could rub off on gold and silver, and more on silver. Gold looks good for a test of Rs 27,150-27,200," said Gnanasekar Thiagarajan, director with Commtrendz Research in Mumbai.

The most-active gold for December delivery on the Multi Commodity Exchange (MCX) was 0.30% lower at Rs 26,805 per 10 grams, after gaining more than 3.3% in the previous two weeks.

Buying could be done at Rs 26,600-26,640, for a target of Rs 26,850-26,900, said Aurobinda Prasad, head of research with Karvy Comtrade.

Finance ministers and central bank governors of the Group of 20 major economies said they expected the Oct. 23 summit to "decisively address the current challenges through a comprehensive plan".

Many investors have stayed away from gold given market turbulence in the past few months caused by the deepening euro zone debt crisis, the fight over raising the US debt ceiling and fears that the global economy would plunge into another recession.

Gold demand in India, the world's biggest bullion conusumer, will peak in October with a slew of festivals including Dhanteras and Diwali slated later in the month.

Silver futures are expected to move higher in tandem with the yellow metal, analysts said.

Silver for December delivery on the MCX was 0.95% lower at Rs 52,900 per kg. Dips to Rs 52,400 can be bought in silver for a target Rs 54,000, said Thiagarajan.