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Indian gold futures seen gaining further

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Indian futures are likely to extend gains for another week, helped by a weaker dollar overseas, analysts said.

The most-active gold for October delivery on the Multi Commodity Exchange (MCX) was 0.24 percent higher at 29,976 rupees per 10 grams at 1158 GMT.

"Both gold and silver are moving in line with risky assets and U.S. payroll numbers have underpinned sentiment for precious metals as the dollar fell across the board," said Gnanasekar Thiagarajan, director with Commtrendz Research.

Dollar and gold often move in opposite directions as the two compete for funds globally.

The euro eased on Monday after making significant gains, with many investors wary of buying the currency on caution about how effective action pledged by European policymakers to resolve the euro zone crisis would be.

Buying is advised on dips within a 29,650-29,670 range, with a stop loss of 29,500, targeting 30,100, said Thiagarajan.

However, slack physical demand ahead of the festival and wedding seasons could limit the upside.

Physical demand has already halved in India, the world's biggest consumer in 2011, due to a doubling of import duty to 4 percent. Forecasts of poor rains are likely to further threaten demand from rural areas, which contribute to 60 percent of the country's gold imports.

Silver could also rise in tandem with the yellow metal.

Silver for September delivery on the was flat at 53,260 rupees per kg.

Buying is advised on dips to 53,000, with a stop loss of 52,700, targeting 53,900, said Thiagarajan.

 

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