Gold bullion — File Photo
Gold bullion — File Photo

MUMBAI: India's benchmark October gold contract extended gains on Monday morning to hit a record high of 31,077 rupees per 10 grams, following a rally in the world markets and on a weak rupee.

International spot gold rose to the loftiest level since mid-April on Monday, extending strong gains from last week as expectations for further monetary easing from the US Federal Reserve kept sentiment buoyant.

However, a price rise is set to trim India's gold consumption, and subsequently imports, in the peak festive season.

Moreover, Indian physical gold traders refrained from taking fresh deals as prices hit its peak in a seasonally strong demand period, with the rupee, which hit the highest level in a week, further helping prices.

The most-traded gold for October delivery on the Multi Commodity Exchange (MCX) hit a high of 31,091 rupees per 10 grams, before trading up 0.27 per cent at 31,030 rupees at 0858 GMT.

International spot gold rose to the loftiest level since mid-April on Monday, extending strong gains from last week as expectations for further monetary easing from the US Federal Reserve kept sentiment buoyant.

The rupee plays an important role in determining the landed cost of the dollar-quoted yellow metal.

“Buying is very slow... we could see some buying on dips to 30,500 rupees,” said Haresh Acharya, head of bullion desk, Parker Bullion, referring to a two per cent drop in prices from the current levels.

India, the world's biggest consumer, is in the middle of the festival and wedding season which will continue till November.

Gold imports to India are likely to fall by as much as 26 per cent, or by 200 to 250 tonnes, in 2012 as record high prices hit the budgets of consumers.

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