MUMBAI (CommodityOnline.com) -- Gold prices continued its upward journey in the Indian bullion market in the wake of the bullish mood on the yellow metal in the overseas market.
Bullion dealers said higher overseas market advices have led traders to stock more gold, leading the metal to end Rs 5 higher at Rs 8,725 per 10 grams.
Standard gold and ornaments closed up by Rs 5 each at Rs 8,725 and Rs 8,575 per 10 grams respectively while sovereign gained Rs 25 at Rs 775 per piece of 8 gram.
But silver prices came down thanks to reduced offtake by jewellery fabricators against fresh stocks arrival. Silver ready lacked necessary buying support and lost Rs 25 at Rs 17,325 per kilo, but weekly-based delivery ended Rs 130 higher at Rs 17,550 per kilo on speculative buying.
"Retailers are picking up gold as there are lots overseas advices coming in favour of gold," said Sarin Shah, a leading jeweller in Mumbai.
In the global market, gold prices have gone up on the back of better than expected U.S. employment data last week and firming crude oil futures.
However, lead analysts said strengthening of Indian rupee and the continuing weakness in dollar will soften gold prices in the country.
Bankers predicted that a strong rupee will keep gold under Rs 10,000 per 10 grams in the Indian market.
A poll of 13 banks and brokerages conducted by investment firm ScotiaMocatta showed a median price of Rs 9,210 for gold by the end of December and an average price of Rs 8,950 for 2007.
The poll results said gold prices will be softened by a stronger rupee against the dollar, keeping prices in the Rs 9,000 terrain.
The Indian rupee has appreciated by nearly 9% against the dollar from January, making the import-driven gold metal cheaper for Indians.
Last Friday, August gold on the leading Multi Commodity Exchange was at Rs 8,561, after touching its lowest level this year on Thursday at Rs 8,552.
India is the world's largest consumer of gold. Export of gold jewellery in 2006-07 has shown a growth of close to 35% at US$5.2 billion over US$3.87 billion in 2005-06. Export of coloured gemstones at US$246.48 million logged a growth of 6.08% during 2006-07 as compared to US$232.35 million in 2005-06.
Major destinations for Indian exports have been the U.S., UAE, Hong Kong, Belgium and Israel. In fact, the U.S., UAE and Hong Kong together accounted for over 70% of the total exports in the previous fiscal year.
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