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Faltering bullion price

boosts Dubai purchases

DUBAI: Indian subcontinent demand for Dubai gold is being fanned by a mix of falling international bullion prices and India's upcoming marriage season and national elections, Dubai wholesalers and traders said on Sunday.

"The weaker price will be received very well and there should be good demand at this level. Around $390 (per ounce) is very good for buying levels," one Dubai wholesaler said.

Gold was last quoted on Saturday at $390.65-91.05 per ounce, its lowest level since the first week of the year and well down from six-year highs of around $418 per ounce in February.

Dubai's benchmark Ten Tola bar -- 3.746 ounces of 24 carat gold -- was quoted at 5,400 dirhams, down from 5,455 dirhams on April 14. Ten gramme pieces lost five dirhams to 462 dirhams.

"The price is looking weak technically. Tola bars could be hitting 5,360 dirhams shortly," a local trader said.

Dubai is the main feeder market into India which is the world's largest consumer of gold.

Indian expatriate demand ahead of the country's marriage season and uncertainty ahead of elections starting on April 27 -- which appears to be heading towards a hung parliament -- was also contributing to the bullish outlook, traders said.

The Indian main marriage season lasts between April and June and most purchases are completed in April and May.

After a sluggish start to the year, Dubai's trade activity has picked up in March and April because of weaker bullion prices, strong Indian demand and a local shopping festival.

Dubai gold imports in March increased to 27.4 tonnes from 23.4 tonnes the previous month, according to figures released by the World Gold Council in Dubai on Sunday.

Imports recovered because of higher demand from Indian subcontinent expatriate workers in Dubai as a consequence of softer world bullion prices, Dubai traders said.

"The price came really down in March and made it very attractive to our Indian buyers," one souk seller said.

World prices averaged between $393-400 per ounce in March, down from February's highs.

"When the price is looking to go above $400 local demand here sometimes hesitates," one Dubai trader said.

Higher imports in March were also tied to the government-sponsored Dubai shopping festival which promoted the local gold and jewellery trade through retail discounts and daily raffles to win one kg gold bars. -Reuter