Gold traders buy as prices near 2-week low

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Indian gold prices extended losses on Friday, hitting its lowest level in nearly two weeks, weighed by a firm rupee, triggering bargain hunting from physical traders as price levels were attractive. Supply of recycled gold slowed.

At 2.18 p.m., the most-active gold for August delivery on the Multi Commodity Exchange (MCX) was 0.17 percent lower at Rs 29,602 per 10 grams, after hitting a low of 29,583 rupees, a level last seen on June 11.

Traders in India are waiting for monsoon rains to pick up, which is vital to farm productivity and profits. Rural areas contribute to about 60 per cent of gold imports.

"There was demand yesterday evening because of correction. If prices are maintained at these level, we can see some buying," said Ketan Shroff, director with Pushpak Bullion.

There could be a pick up in imports in the second half of the year, if record prices ease but annual volumes will still fall about 30 per cent after a tax hike, which could crimp demand until 2014, the Bombay Bullion Association head said.

India's crucial monsoon rains were again below average last week and failed to cover as much of the country as they should have, the weather office said.

Silver, an industrial metal, following positive trend in copper. Silver for July delivery on the MCX was 0.68 per cent higher at Rs 52,108 per kg.