India gold up but wedding season stokes demand

Indian gold edged up on Wednesday evening tailing firm overseas markets, but a stronger rupee capped the upside, analysts and traders said.

Demand in physical markets was steady, supported by the ongoing wedding season, they said.

The most-active gold for June delivery on the Multi Commodity Exchange was trading 0.3% higher at Rs 21,225 per 10 grams at 4:07 pm.

"Despite higher prices, the wedding season demand is there in the market," said a dealer with a state-run, bullion-importing bank.

India is in the midst of the wedding season, when parents give gold jewellery to their daughters as part of their trousseau.

International gold prices rallied to record highs against a backdrop of a weaker dollar, ongoing investor worries over inflation and euro zone debt and unrest in the Middle East.

The Indian rupee jumped to a 5-1/2-month high in afternoon trade on Wednesday on the back of the euro's gains against the dollar and rising dollar inflows into equities.

India's demand for gold should be robust in 2011 despite the likelihood of higher prices, pushed by geopolitical tensions, according to the World Gold Council.