Gold Demand in India Lukewarm as Price Keeps Rising

Gold prices in India rose for a third straight day to stay above 28,000 rupees per 10 grams for the first time in a week, denting physical demand which has been subdued so far this week, dealers said.

* The most-active February gold contract on the Multi Commodity Exchange was 0.61 percent higher at 28,036 rupees per 10 grams by 2:10 p.m.

* Demand is muted. Jewellers tend to restock during this period as they prepare for the wedding season, but the price above 28,000 rupees discouraged them, said a Mumbai-based dealer with a private bank dealing in bullion.

* International spot gold rose to a one-week high on Wednesday as encouraging data from the United States and Germany helped ease fears about an economic slowdown, with a weak dollar adding support to prices.

* The rupee plays an important role in determining the landed cost of the dollar-quoted yellow metal. On Wednesday it appreciated and capped the upside in bullion.

* A Reuters poll of 20 hedge fund managers, economists and traders showed expectations for international spot gold prices to fall below $1,500 an ounce over the next three months and they are unlikely to retest September's all-time highs until later 2012 at the earliest.