Mumbai: Gold futures in India, the largest consumer of the precious metal, advanced for a second day to a record, spurred by a weaker domestic currency and gains in global prices of bullion.
August-delivery futures rose as much as 0.7 per cent to an all-time high of Rs18,850 (Dh1,472) per 10 grams on the Multi Commodity Exchange of India Limited. The contract traded at Rs18,808 at 12.02pm in Mumbai.
Gold for immediate delivery, heading for a tenth annual gain, reached a record last month as investors seek a hedge against currencies amid European debt concerns. Prices in India, which have risen 27 per cent in the past year, may reach Rs20,000 in the next couple of weeks, according to Rajesh Exports Limited, the nation's largest producer and exporter of jewellery.
"Surprisingly, even at these record prices we are not seeing too much of a destruction in jewellery demand," Rajesh Mehta, chairman of Rajesh Exports, said in a phone interview. Consumers "are getting used to the record high prices, and maybe they are expecting prices to go still higher."
India's rupee fell for a third day after sliding the most in more than 15 months Wednesday. A weaker local currency makes imports of gold denominated in dollars expensive.
Gold in New York reached a record $1,249.70 an ounce on May 14. Futures reached the highest level since May 17, on Tuesday, and traded at $1,226.10 at 12.02pm in Mumbai Wednesday.
Physical demand may rebound if prices fall below $1,200 an ounce, Ketan Shroff, managing director of Pushpak Bullions Pvt., a bullion trader, said in a phone interview from Mumbai.
"Prices are not supportive right now because it is a new high so people are not buying physical gold," he said.
