960415

Gold prices firm in India, Pakistan as dollar gains

BOMBAY: A mild depreciation of the currencies of India and Pakistan against the U.S dollar is expected to help gold prices firm in the Indian sub-continent, bullion dealers said on Monday.

"The firm trend is likely to continue, buoyed by fresh Indian wedding season demand," said a Bombay dealer.

Dollar purchases by the State Bank of India, the country's largest commercial bank, had pushed the Indian rupee down to around 34.12 per dollar last week from a high of 33.75. The rupee was trading at 34.21 to a dollar on Monday.

Bombay dealers expect the rupee to remain under pressure this week, which will in turn push up the prices of imported gold, India's main source of supply.

In Karachi, dealers predict a gradual rise in gold prices because of fears of a further fall in the Pakistani rupee ahead of the budget for fiscal 1996/97 (July/June) due to be unveiled in June.

"Gold rates will certainly rise if the rupee is depreciated by the State (central) Bank of Pakistan," dealer Sajid Siddiqi said on Sunday after the central bank adjusted the rupee lower, pushing the gold price up in the domestic markets.

The bank depreciated the rupee to 34.6600/34.8333 to the dollar on Sunday from 34.5800/34.7529 fixed on April 3.

Dealers in Dubai said Indian and Pakistani gold demand remained firm in the Gulf re-export centre because of flat bullion prices.

"Demand from India and Pakistan is steady and going very well now because of the marriage season but after May I expect the market to slow down," a major Pakistani gold wholesaler based in Dubai said.

Bombay dealers said they expect a spurt in wedding season demand for gold which is expected to peak between mid-April and mid-May and last until the onset of monsoon rains in June.

Dealers said Indian demand for gold may get a further boost especially in rural areas ahead of Indian parliamentary elections, scheduled between April 27 and May 30.

"There's a sense of uncertainty about the outcome as no single political party is expected to win a majority to form a government on its own," said a dealer.

Dubai gold dealers expect Indian gold demand to ebb in May when gold purchases for the main maare over.

They said demand from Indian sub-continent expatriates in Dubai had picked up in the past two weeks as world bullion prices held below $400 an ounce.

In the Bombay bullion market, gold had gained 29 rupees to 5,170 rupees per 10 grammes last week as both imports and the customs' sale of confiscated gold were inadequate.-Reuter