Mumbai: Gold prices in India, the world's biggest buyer of the metal, are likely to rise this week, extending gains past their highest level in four months, due to an import duty hike and dollar weakness overseas.
At 0120 GMT, the most-actively traded gold for October delivery on the Multi Commodity Exchange (MCX) was 0.27 percent higher at 29,000 rupees per 10 grams, after hitting a high of 29,333 rupees, a level last seen on April 12.
"It is unlikely that prices will go down due to government's increase in duty," said Gnanasekar Thiagarajan, director with Commtrendz Research, advising to buy gold and silver on dips.
Buying is advised at 28,650 rupees, for a target of 29,350 rupees, with a stop loss of 28,400 rupees, said Thiagarajan.
On Tuesday, the federal government hiked the import duty on gold, for the third time in eight months, to 10 percent from the earlier 8 percent to curb surging imports.
The dollar climbed to a one-week high against both the euro and the yen on Tuesday after a key gauge of U.S. consumer spending rose at its fastest pace in seven months. Gold acts as an alternative investment to the dollar.
Silver for September delivery on the MCX was 0.96 percent higher at 46,300 rupees per kg.
Buying is advised in silver at 45,700 rupees, for a target of 48,000 rupees, with a stop loss at 45,100 rupees, said Thiagarajan.