gold inches higher

Gold edged higher Monday as a rise in demand for physical metal offset a slightly higher dollar.

On the bullish side, India is expected to import 10% more gold during 2006 compared with the 2005 total of 720 tons, according to a representative of the Gem and Jewelry Export Promotion Council, according to wire service reports. The news helped ease concerns that increased price volatility had been off-putting to retail investors and buyers of jewelry in the subcontinent.

Weighing on the downward side was a slightly higher dollar against the euro, which was recently trading at $1.2762 vs. 1.2788 late Friday. The dollar was buying 116.525 yen, barely changed from 116.52 yen at the end of last week. Gold tends to move in the opposite direction of the greenback.

The bulls won out, however, with contracts for December delivery of bullion closing up 50 cents at $595.90 an ounce on the Comex division of the New York Mercantile Exchange.

"The news from India was an auspicious development," says Jon Nadler, an analyst at Montreal-based bullion dealer Kitco, who also noted that the news offsets concern about central-bank selling that has been dogging the market for most of the month.

This week traders will eagerly await data from the European Central Bank, scheduled for Tuesday release, showing the value of gold sales last week. Tuesday marks the deadline for central banks to fill their annual quota of bullion sales under the terms of a multilateral agreement.