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Apr 7, 2010
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India stocks up as wedding season starts, rupee helps

By
Reuters
Published
Apr 7, 2010

By Lewa Pardomuan

SINGAPORE (Reuters) - Indian jewellers are stocking up as the wedding season kicks in in the world's largest gold consumer, but higher bullion prices have ignited selling in other parts of Asia, dealers said on Wednesday 7 April.



Premiums for gold bars stood at 70 to 80 cents an ounce to the spot London prices in Singapore, steady from two weeks ago, as purchases from India helped defy profit taking from holders in Indonesia and Thailand. .

Gold rose $3.40 to $1,136.60, within sight of Tuesday 6 April's 1-month high on safe-haven buying driven by renewed concerns about debt-ridden Greece. Gold was less than 1 percent below a 6-1/2-week high near $1,150 hit in early March.

"Buying interest from India is still there although it's a bit slow today because the gold price is moving higher. We've seen some buying because of a strong rupee," said a dealer in Singapore.

"The Indonesians are selling while Thailand is a bit neutral at this time," he added.

The normally-busy wedding season is underway in India, with festivals such as Akshaya Tritiya in May expected to further boost demand for gold jewellery.

Gold jewellery is the most common gift during religious events in India, which accounts for 20 percent of global demand for gold, and dealers said a strong rupee could help consumers cope with the rising gold price in the international market.

Indian parents give gold jewellery to their daughters at weddings for security.

The partially convertible rupee rose as high as 44.31 on Wednesday 7 April, its strongest since Sept. 8, 2008. It had ended at 44.45/46 on Tuesday 6 April.

A slowdown in physical demand cut premiums in Hong Kong to $1 from $1.20 two weeks ago, when gold struggled to stay above the psychologically important $1,100 level.

"Buying interest seems to fade out. The price is a bit higher and people are scared," said Ronald Leung, director of Lee Cheong Gold Dealers in Hong Kong. "It seems the physicals could buy a bit at the lower end." In Tokyo, persistent selling by retail investors sent gold bars to a discount of 75 cents prices after being quoted on par to the spot London prices two weeks ago.

"The yen-denominated gold price is also very strong, so we could see a lot of selling from the general public," said a dealer in Tokyo, referring to gains on Tokyo Commodity Exchange.

"I guess it's only in Japan that gold bars are at a discount," he added.

(Editing by Ed Lane)

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