Gold declines on strong rupee, holds at 1-week record overseas.

KOLKATA: A strong rupee pushed down gold prices in India even though it held at a one-week high in international markets. Spot gold dropped by Rs 450 per 10 gm on Thursday to touch Rs 29,550. Bullion traders said a further decline is expected if a stable government is voted to power at the Centre on Friday.

"There is expectation in all quarters that the NDA will come to power this time. If that happens then the rupee will strengthen further on Friday, which will bring down prices of gold further," said Amit Sampat, director, Pushpak Bullion.

Gold fell in the futures market as well, by 0.33 per cent, on the back of the strong rupee. The MCX June contract traded at Rs 28,603 per 10 gm at noon. It touched an intraday high of Rs 28,686 per 10 gm and an intraday low of Rs 28,600 per 10 gm.

"All eyes will be on how the new government deals with the import duty and the 80:20 rule," an analyst said, referring to the requirement that 20 per cent of imports need to be exported. Gold now attracts an import duty of 10 per cent.

In the international market, gold held above a one-week high as investors weighed the conflict in Ukraine against the outlook for the US economy and further reductions in the Federal Reserve's stimulus programme.

Bullion for immediate delivery traded at $1,303.66 an ounce at 1:55 p.m. in Singapore from $1,305.97 yesterday, when prices climbed to $1,309.09, the highest since May 7, according to Bloomberg generic pricing.

The metal has advanced 8.5 per cent this year partly on tension between Ukraine and Russia. "Gold advanced on safe-haven demand as tensions escalated in Ukraine," Lachlan Shaw, an analyst at Commonwealth Bank of Australia, wrote in a note today.

Gold for June delivery traded at $1,303.50 an ounce on the Comex in New York from $1,305.90 yesterday. Gold was trading at $1302.56 per ounce in the international market at 12.30 pm. India time.

Source : economictimes.indiatimes.com