Indian gold buyers wait for below support price levels

MUMBAI: Gold buying in India remained subdued, with negligible stocks of the yellow metal bought before the tax hike, while consumers waited for a price correction below support levels.

Weddings and festive season have started in India, the world's biggest buyer of the metal, but the federal government plans to restrict gold buying by announcing more measures in addition to a 50 percent hike in import duty to keep a lid on its bloating current account deficit.

Traders had accumulated stocks, when the finance minister hinted of a duty hike on Jan. 2, and later raised the duty on Jan. 21.

"Activity is happening, but not in a huge way after yesterday's rebound. Prices are holding the 30,000 rupees level and the market is expecting a correction below the support level, triggered by shift from gold to currencies and equities," said a dealer with a private bullion importing bank in Mumbai.

The actively traded gold contract for April delivery on the Multi Commodity Exchange (MCX) was 0.03 percent lower 30,771 rupees per 10 grams.

A slightly stronger rupee weighed on prices of the yellow metal.

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

Silver contract for March delivery on the MCX was 0.21 percent higher at 58,543 rupees per kg.