Re edges higher as oil retreats, Gold dips on poor demand

Tag : melting metals
MUMBAI: The Indian rupee strengthened on Thursday, bolstered by afurther drop in global crude prices and a rally in local shares,which renewed hopes for further foreign fund inflows. The partiallyconvertible rupee ended at 42.81/82 per dollar, 0.6 stronger than43.07/08 at Wednesday's close.

It had hit a 15-month low of 43.50 earlier this month. "The rupeerose mainly because oil prices having come down and also the sharemarket rally," the chief dealer with a state-run bank said. Oilprices fell around a dollar on Thursday, extending this week'ssteep losses, after evidence mounted of fading demand in the UnitedStates and as a fresh diplomatic initiative from Washington dilutedtension over Iran.

Gold prices slumped by Rs 145 to Rs 13,465 per 10 gram on thebullion market here today on restricted buying at existing highlevels.

Marketmen said shifting of some funds from melting precious metalsto firm equity markets also helped in pulling down the gold prices,which had touched a record high of Rs 13,650 on July 15.Sluggishness in the market even discounted reports that the metalin London shot up on easing crude oil prices.

They said global trend which normally set a price band here indomestic market failed to boost the metal demand as stockists werehesitant to buy gold which rose to record levels. They saidoff-marriage and festival season too had negative impact on theprices.

Standard gold and ornaments lost Rs 145 each to Rs 13,465 and Rs13,315 per 10 grams respectively. Sovereign followed suit and lostRs 50 to Rs 10,550 per piece of eight gram.

In a similar fashion, silver ready declined by Rs 100 to Rs 25,500per kg and weekly-based delivery by Rs 135 to Rs 26,290 per kgrespectively. Silver coins, however, remained unchanged at Rs28,000 for buying and Rs 28,100 for selling of 100 pieces.

Indian shares snapped a five-day losing streak and rose 4.3 percenton Thursday, comforted by cheaper oil and easing fears over aglobal credit crisis. Traders were wary of inflation, whicheconomists polled by Reuters expected to top 12 percent.

Data released later showed annual wholesale price inflation at11.91 percent in early July, marginally above 11.89 percent in theprevious week. "The market had already factored in inflation closeto the 12-percent level, so this will not have a lot of impact onthe market," a dealer with a private bank said.

The stock index is down more than 35 percent in 2008, making it oneof the worst Asian performers, with foreign funds having pulled out$7.2 billion so far. That has been a major factor in the rupee'snearly 8 percent decline. The local unit had risen more than 12percent in 2007, when foreign investors pumped $17.4 billion into arecord breaking stock market.