Gold seen extending gains from one-week high

MUMBAI (Reuters) - Gold futures are likely to extend gains from the highest level in more than a week helped by increased safe-haven bids, with weak physical demand back home weighing on sentiment.

At 1224 GMT (5:54 pm IST), the actively traded gold for April delivery on the Multi Commodity Exchange (MCX) was 0.59 percent higher at 29,549 rupees per 10 gram, after hitting a high of 29,644 rupees, a level last seen on March 7.

"Gold will find safe-haven bids on the back of the Cyprus problem in euro zone," said Gnanasekar Thiagarajan, a director at Commtrendz Research.

The euro zone agreed on Saturday to hand Cyprus a bailout worth 10 billion euros, but required the country's savers to pay up to 10 percent on their deposits, shaking confidence in banks across the continent.

Buying is advised in gold on dips to 29,485 rupees, with a stop loss of 29,350, targeting 29,850, said Thiagarajan.

Slack physical demand from India, the world's biggest buyer of the metal, could keep the upside limited.

India has been trying to curb imports of gold, which has been called a dead investment by the federal government, to put a lid on record high current account deficit by raising import duty by 50 percent to 6 percent in January.

Silver for May delivery on the MCX was 0.04 percent higher at 54,218 rupees per kg.

Selling is advised on rallies in silver to 54,450-54,500 rupees, with a stop loss of 54,850, targeting 53,400, said Thiagarajan.

(Reporting by Siddesh Mayenkar; Editing by Subhranshu Sahu)