Gold extends gains to over one-week high.

Gold Bars

Gold prices in India extended gains on Monday to hit the highest level in 10 days, attempting to reclaim the keenly watched Rs. 30,000 mark, helped by a weaker rupee and firm overseas markets.

At 2:57 p.m., gold for immediate delivery on the Multi Commodity Exchange (MCX) was 0.65 per cent higher at Rs. 29,565 per 10 grams, after hitting a high of Rs. 29,644, a level last seen on March 7.

Overseas gold rose above $1,600 for the first time in more than two weeks as a radical bailout package for Cyprus threatened to trigger fresh turmoil in the euro zone, driving investors to seek safety in gold.

The rupee, which weakened on Monday following losses in domestic equity markets and a broad risk-off globally, plays an important role in determining the landed cost of the dollar-quoted yellow metal.

“Demand is very low due to high prices and lack of liquidity before the year-end. Things will be clear in April,” said Haresh Acharya, head of bullion desk, Parker Bullion.

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 per cent to 6 per cent in January.

Silver for May delivery on the MCX was 0.31 per cent higher at Rs. 54,363 per kg.

Copyright @ Thomson Reuters 2013