Gold traders pick bargains fearing price rise

MUMBAI (Reuters) - Gold traders in India, the world's biggest buyer of the metal, continued to pick up bargains for a second consecutive week fearing further price rise.

* An 11 percent slump in gold prices since last week released years of pent-up demand, resulting in a supply shortage in the physical market, triggering higher premiums.

* "There are a lot of deals as people are comfortable at these levels ... All are saying prices may go up any time," said a dealer with a state-run bullion importing bank.

* However, the federal government has been trying to keep a lid on bulging imports to counter the record high current account deficit.

* The actively traded gold for June delivery on the Multi Commodity Exchange (MCX) was 405 rupees higher at 26,457 rupees per 10 grams at 3:42 p.m.

* The rupee, which weakened on Monday, plays an important role in determining the landed cost of the dollar-quoted yellow metal.

* Gold in the overseas market jumped more than 2 percent after a rebound above $1,400 ignited technical buying, but sentiment was shaky as steady outflows from exchange-traded funds trimmed their bullion holdings to the lowest in three years.

* May silver on the MCX was 215 rupees higher at 43,638 rupees per kg.

(Reporting by Siddesh Mayenkar; Editing by Anand Basu)