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Gold Traders Find Difficulty In Replenishing Stocks

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Gold traders in India, the world's biggest buyer of the metal, faced difficulty in re-stocking, with a waiting period of 2-3 days for delivery, even as demand edged up after prices hit their lowest level in nearly two years.

In a bid to contain the record current account gap, the government banned consignment imports, making it difficult for smaller jewellers with lower working capital to source supplies. The government also raised the import duty to 8 per cent.

"There is a little bit of buying at lower levels, but there is difficulty in getting supplies...," said Harshad Ajmera, proprietor of JJ Gold House.

Demand is not as strong as in April or May, when India imported more than 300 tonnes of the yellow metal, and part of those supplies has helped meet an uptick in demand in June. Banks have been unwilling to import the yellow metal, as they wait for guidelines from the central bank on outright purchases.

At 3.44 p.m., the actively traded gold for August delivery on the Multi Commodity Exchange (MCX) was 1.57 per cent lower at Rs 24,977 per 10 grams, after hitting a low of Rs 24,952, a level last seen in late September 2011, weighed by weak global leads and a stronger rupee.

In the overseas market, gold fell below $1,200 to its lowest since August 2010 before recovering, and is on track to post its worst quarter since at least 1968.

The rupee, which traded strong on Friday, plays an important role in determining the landed cost of the dollar-quoted yellow metal.

Silver for July delivery on the MCX was 0.53 per cent higher at Rs 39,000  per kilogram.

(Reuters)


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