Gold rises as global rates advance on Iraq violence.

MUMBAI: Gold in Mumbai's grey market climbed over a percentage point to Rs 28,400 per 10 gm at noon on Tuesday tracking international rates, which rose to a three-month high of $1,332.10 an ounce (32 gm), following escalating violence in Iraq and a weaker dollar.

However, demand for the yellow metal among Indian households remained weak ahead of an anticipated cut in import duty. The government levies 10% duty on gold imports, which bullion merchants and consumers expect would be cut by 2-3 percentage points when finance minister Arun Jaitley presents the budget for FY15.

"A 3% cut in import duty would result in prices reducing to Rs 27,500 levels from the current rate," said Kumar Jain, a retail jeweller in Mumbai's Zaveri Bazaar gold market. "Consumers are holding back purchases on anticipation of a cut in the duty and so demand is weak. I expect demand to pick up if the government reduces the duty."

India is the world's largest gold importer, buying around 800 tonnes of gold on average each year. A weak dollar and the threat of rising inflation tend to force up prices of gold.

Source : economictimes.indiatimes.com