India gold futures steady on crude, rupee; G8 eyed

India gold futures traded steady on Wednesday as pressure from lower crude was offset by a weak rupee back home, with investors eyeing Group of Eight summit for direction, analysts said.

The most active August gold contract MAUQ9 was 0.13 percent lower 14,585 rupees per 10 grams at 11:17 a.m.

"Traders would eye for comments from the G8 meet for direction," said Debjyoti Chattejee, assistant vice-president with ADMISI Commodities. "The range seen is 14,360-14,650 (rupees)."

U.S. crude futures dropped towards $62 a barrel, extending losses from the previous day after industry data showed that distillate and gasoline stockpiles rose more than expected last week. See [ID:nT90508]

Falling crude diminishes gold appeal as a safe hedge against inflation.

The Indian rupee hit its lowest in two weeks as local shares fell in tandem with regional markets, triggering concerns over sustainability of foreign fund inflows. See [ID:nBOM147482]

A weak Indian rupee makes the dollar-quoted asset expensive.

The market is looking for any comments on the dollar's role as the global reserve currency at the Group of Eight leaders' meeting starting on Wednesday, which could have an impact on the foreign exchange markets and consequently on gold.

Gold may trade in the range of 14,480-14,650 rupees, said Abhishek Chauhan, an analyst with Angel Commodities

Gold lifts from 2-month low; ETF holdings dip

TOKYO (Reuters) - Gold edged up on Thursday, after falling almost $15 toward $900 an ounce the previous day as investor risk aversion pushed the dollar up versus the euro, dulling bullion's allure as an alternative asset.

The bounce from a two-month low hit on Wednesday was mainly led by bargain-hunting by regional dealers, while physical demand remained low at current high levels, traders said.

Spot gold traded at $911.80 an ounce at 0337 GMT, up 0.4 percent from New York's notional close of $908.45.

U.S. gold futures for August delivery rose 0.3 percent to $911.70 an ounce after falling $19.80, or 2.1 percent, to $909.30 on the COMEX division of the New York Mercantile Exchange on Wednesday.

"There's bargain-hunter buying in Asia after seeing gold falling to a six-week low. In the short-term, I expect gold to hold a level between $905 and $914," said Louis Lok, a dealer at Ban of China in Hong Kong.

Bullion has lost some of its attraction recently due to lessened inflation concerns after a fall in oil prices and as flight-to-quality buying in the face of economic uncertainty was directed into U.S. Treasury bonds and the dollar.

On Wednesday, gold fell as low as $904.70, its lowest since May 8. Liquidation of long positions by fund managers had accelerated the decline after gold broke below technical support at $915, Lok said.

"All the commodities markets faced selling pressure, and money came out from there into the dollar again," Lok said.

But the dollar pared recent gains on Thursday, with the euro rising 0.2 percent versus the U.S. currency.

It was still not far from a two-week high versus the euro hit the previous day when mounting doubts about the health of the global economy spurred risk aversion.

Looking ahead, traders said gold may test the downside again when a technical bounce is over.

"Gold will likely stay under pressure unless investor confidence comes back over the financial sector and a recovery in the global economy is more in sight, resulting in a rally in equities," said a fund manager at a Tokyo-based company.

"I expect gold to test how resilient (support) is and whether physical demand emerges this summer," the fund manager said, referring to a key support level of $870-$880.

Bank of China's Lok had a similar view.

"There is a very very important support level at $878 to $885. In case the market cannot hold above this level, I don't think it can be lifted above $920 again," Lok said.

Gold trades at previous day's level, silver tumbles by Rs 100

NEW DELHI: Gold prices

on Wednesday traded at previous day's level of Rs 14,780 per ten gram in the bullion market here as stockists and jewellers refrained from buying at existing higher levels.

Marketmen said the buying activity was restricted as prices surged in last two sessions after the budgetory proposals almost doubled the import duty on silver and gold.

Presenting the Union Budget on Monday, the government announced increasing import duty on gold bars from Rs 100 per 10 gram to Rs 200 per 10 gram

The trading activity was almost negligible and failed to take any negative impact of reports of the precious metal in Asia fell for a third day as the dollar advanced against the euro and crude oil tumbled.

Investors, who planned to purchase gold after budget on expectations of some sop to the industry, further postponed their decision, said Suresh Jain of All India Sarafa (Bullion) Bazar Association.

He said some traders parked their funds in volatile equity markets in purchasing fundamentally strong shares.

Standard gold and ornaments held unchanged at Rs 14,780 and Rs 14,630 per ten gram respectively. Sovereign held unchanged at rs 12,325 per piece of eight gram.

Silver ready fell by Rs 100 at Rs 21,900 per kg and weekly-based delivery by Rs 110 to Rs 21,740 per kg. Silver coins held unchanged at Rs 28,900 for buying and Rs 29,000 for selling of 100 pieces.

India copper, gold futures set to open up

India's copper futures may open higher on Thursday tracking gains in London, but economic and demand concerns could weigh on the red metal later in the session, analysts said.

The most-traded August contract MCCQ9 on the Multi Commodity Exchange of India (MCX) ended 2.1 percent lower at 236.15 rupees in the previous session.

At 8:50 a.m., three month London copper was 1.76 percent higher at $4,829.75 a tonne on a weak dollar, after falling to $4,710 in the previous session, its lowest level since June 23.

MCX August copper may open at 238 rupees per kg, said Abhishek Chauhan, a technical analyst with Angel Commodities. "Resistance is pegged at 241 (rupees)."

"The strategy is to sell on rise on continuing demand woes. Selling is recommended at 238.50 rupees with a target of 234.50/232 rupees," said Kunal Shah, assistant vice-president with Nirmal Bang Commodities.

The July zinc contract MZIN9 ended at 74.20 rupees per kg, while lead for July delivery MLDN9 ended at 78.35 rupees per kg in the previous session.

GOLD:

India's gold futures may open slightly higher supported by a weak dollar and recovering crude, analysts said.

The benchmark August gold MAUQ9 closed 0.7 percent lower at 14,496 rupees in the previous session. The contract is likely to open at 14,535 rupees per 10 grams, said Aurobinda Prasad, deputy manager-research, Karvy Comtrade. "Gold would trade sideways and may be in the range of 14,400-14,590 rupees.

Higher duty to dim gold imports

MUMBAI:

Gold imports, which are down by over 50% in the calendar year to June from the same period last year, are likely to be hit due to an increase in customs duty on gold bars. Physical demand, which was already low on account of the rise in price above Rs 14,500 per 10 gm, will be constricted further, say traders.

The budget for FY10 stipulates a hike in import duty on gold bars to Rs 200 from Rs 100 per 10 gram and for silver to Rs 1,000 from Rs 500 per kg. In a bid to offset the duty hike, Pranab Mukherjee exempted branded jewellery from excise duty.

However, domestic bullion traders are unhappy with both the measures. While the hike in duty on gold and silver bars will hike the cost of manufacturing jewellery, removal of excise on branded jewellery will boost sales of imported jewellery at the cost of that locally made, according to Bombay Bullion Association president Suresh Hundia.

One of the largest bullion dealers in the country, Prithviraj Kothari of RisshiSiddhi Bullion feels that increase in custom duty will ‘encourage’ smuggling. Ajay Mitra, the managing director of Indian Subcontinent, World Gold Council, said difference in price between the internationally-sourced gold and Indian domestic gold widens between 3-3.5% (per 10 grams) due to the additional taxation. “This could lead to additional smuggling especially during periods of high demand during festival season,” he said.

According to BBA, gold imports fell to 61.8 metric tonnes during the first half of 2009, down 56% from the corresponding period last year. Silver shipments into the country have also declined sharply to around 54 tonnes compared to the regular monthly imports of around 100-300 tonnes.

Bullion analyst and director of commodity research firm Commtrendz, T Gnanasekar also feels that imports and physical demand will be negatively impacted. “There will not be any impact on the prices as they are governed by investment demand and several other factors,” he said. The duty on gold and silver had not been reviewed since 2004 even though prices have increased manifold from Rs 5,000-6,000 per 10 gram to current levels.

According to Vinod Hayagriv, chairman, All India Gems & Jewellery Trade Federation, the increased duty is acceptable as they had not been revised since many years despite an increase in gold prices. “There could be a marginal increase in prices but this can be easily absorbed looking at the inflation in gold,” he said. On the impact of excise removal on branded jewellery, Mr Hayagriv feels there would not be any major impact as duty was applicable on jewellery which was being sold with the jewellers mark or their brand. To save duty most of jewellers were selling without the brand or their mark.