Gold traded sideways near $261.50 resistance during early European business on Wednesday, held in balance by light short-covering and physical demand set against Australian producer hedging, dealers said. London gold fixed at $261.50 a troy ounce in the morning versus Tuesday afternoon's $259.65, its highest since the day before Britain's first 25-tonne gold sale on July 6. Spot prices barely moved in response to data from the World Gold Council (WGC), a gold mining industry group, showing second quarter demand up 16 per cent year-on-year to a quarterly record high of 810 tonnes. The rise resulted from a 13 per cent gain in jewellery demand and 32 per cent rise in gold investment, the WGC said in a survey of 27 countries accounting for 80 per cent of world gold demand. Gold demand set second quarter records in India, the world's largest consumer, the United States, the Middle East and Mexico. ``I would have expected that to be significant but it wasn't. There's no real lustre to gold today,'' said one Londondealer. Australian dollar weakness versus the US unit left the market wary of hedge sales into the local gold price rise.`` The implications of the Aussie dollar is that people will be more tentative to buy at this level with the potential for producer selling from Australia,'' he added. Australian dollar gold was last at A$406.06-A$407.47, its highest since early June. ``We believe that gold ought to meet good resistance again around $261.50, a break of which could see a further leg higher towards $263.00,'' a Swiss dealer said. `` However, we think that this eventual move should provide an opportunity for the bears to sell into rallies,'' he added.

Iraq buys 6 m kg Lanka tea

Iraq has confirmed the purchase of some six million kg of tea from Sri Lanka under the sixth stage of the United Nations-monitored food-for-oil programme, a senior Tea Board official said on Tuesday. Director of the Sri Lanka Tea Promotion Bureau, Hasitha de Alwis, said the tenders were awarded to 17 local companies who would supply the tea between September and October.``There are three varieties of tea which will cost $1.68, $1.77 and $1.80 per kg C&F at Umm Qasr Port,'' he said. Asia Siyaka Commodities (Pvt) Ltd said in its weekly report that Sri Lanka was looking to sell around eight million tonnes of tea directly and indirectly to Iraq. Iraqi trade minister Mohammed Mehdi Saleh visited Colombo in June and held discussions with his Sri Lankan counterpart Kingsley Wickremeratne following the meeting of a joint trade, scientific and technical cooperation committee. Sri Lanka, in exchange for the order of tea, agreed to buy 120,000 tonnes of Basra light crude oil from Iraq. The UN programme allows Baghdad tosell $5.26 billion worth of oil over six months to buy food, medicine and meet other humanitarian needs of the Iraqi people under sweeping UN sanctions imposed after Iraq's 1990 invasion of Kuwait. Under the programme, Iraq had also allocated seven million kg to Vietnam, four million kg to India and three million kg to Indonesia, De Alwis said. Prior to the 1990 invasion of Kuwait, Iraq was among Sri Lanka's top buyers of tea, accounting for about 20 per cent of tea exports. Iraq used to buy some 40 to 50 million kg tea annually of which 60 to 70 per cent was supplied by Sri Lanka.

Leather prices unchanged

Dull and lethargic condition prevailed on the New Delhi leather market on Wednesday when both, raw and treated leather prices after hovering around previous levels on small exchange of buying and selling closed unchanged. Absence of any worthwhile order from leather exporters was another dampening factor, dealers said. The following are raw leather prices per skin in inches in Rs.: Goat salted 30X40" Rs 30-35, unsalted 30"X40" Rs 55-60,sheep salted 32"X40" Rs 130-135 and unsalted 32"X40" 175-180. Treated leather price per sq dm: Goat suede 4.50-6.50 or 5.00 lot, goat napa 2.50-3.50 or 3.00 lot, sheep napa 3.00-5.50 or 4.50 lot, furnished leather Rs 100 per sq meter or Rs 90 lot, and buff leather Rs 30-100 per sq dm

Sugar trading pattern steady

There was no change in the pattern of trading on the primary sugar market in New Delhi on Wednesday when sugar mill gate slipped further owing to reduced offtake while Delhi wholesale sugar prices remained quiet. In the mill gate section, sugar titabi quoted lower at Rs 1440 instead of Rs 1445 a quintal. In the duty paid section, sugar samali also dropped sharply from Rs 1520 to settle at Rs 1515 a quintal. Following were Wednesday quotations in Rs per quintal: Sugar ready M-30 1485-1520, S-30 1470-1490, Sugar mill delivery M-30 1380-1420, S-30 1360-1390, Imported sugar Thailand NT and Dubai NT, sulphor bold NT, mini medium NT, dust 1390-1400 galawat 1250-1300, cutting 1350-1375, khandsari crusher 1390-1400. Sugar mill gate (duty excluded) sugar mill delivery M-30: Khatoli duty paid 1520 Modinagar 1440, titabi 1440, amroha 1385, mawana 1530, sakoti NT, samali 1515 duty paid, baghpat 1430, bulandshaher 1390, nandai NT, nandai (SM.) 1335