Gold demand stays firm at Rs 30,894 per 10 gm

Festival season keeps purchases high

Gold demand in India, the world's biggest buyer of the precious metal, remained vigorous on Thursday as prices were hovering near their lowest in a fortnight, enticing retail consumers preparing for the peak festive season.

By 2.37 pm, the most-active gold contract for December delivery on the Multi Commodity Exchange was up 0.16% at Rs 30,894 per 10 gm.

In the previous session, the contract fell to Rs 30,827, the lowest level since October 5.

"Demand is very good. Diwali is just around the corner and prices are coming down. People are making purchases," said Chanda Venkatesh, managing director of CapsGold, a bullion merchant in Hyderabad.

"Since prices are still very high, some buyers are preferring coins and bars over jewellery."

Global gold climbed on stronger equities, but was still within sight of its weakest level in seven weeks as the US Federal Reserve helped boost the US dollar's safe-haven appeal by announcing its commitment to economic stimulus measures.

December silver rose 0.74% to Rs 59,436 per kg, following a similar trend in the world market.

"Demand for silver is also good, but it will not sustain if prices rise above Rs 60,000," Venkatesh said.

The festival season, traditionally a time to buy gold, is underway in India and will peak with Dhanteras and Diwali next month. Weddings also take place during this period.

The rupee, which edged higher on Thursday, plays an important role in determining the landed cost of the dollar-quoted yellow metal.

Banks were closed on Wednesday due to a holiday.