Gold demand stays firm on price drop

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 per cent at Rs 30,894 per 10 gm.

In the previous session, the contract fell to 30,827 rupees, 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 per cent 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.