India gold futures down on strong dollar, weak crude

MUMBAI, Aug 25 (Reuters) - India's gold futures were down on Monday tracking the overseas markets, where a strong dollar and weak crude oil made investors pull out of precious metals.

"It is not a correction... it is a bearish trend altogether," said Subodh Gupta, analyst at Anand Rathi Commodities.

Foreign gold, that guides the local markets, slumped by one percent, losing its safe haven appeal as the dollar rose to a two-year high against the sterling and crude oil steadied after its biggest one-day drop since December 2004.

Gold generally moves in tandem with crude oil as the latter signals inflation, while the metal negates it. But the metal has an inverse relation with the dollar as the two compete for funds.

The benchmark October contract on the MCX was expected to trade within 11,530 rupees and 11,700 rupees per 10 grams, said Harish Galipelli, head of research at Karvy Comtrade Ltd.

Open interest for October gold was at 10,459 lots, down from 10,508 on Saturday. Volume in the last session was 1.99 kg. Silver futures were also expected to fall on the back of gold, analysts said.

September silver on MCX MSVU8 was expected to range within 19,500 rupees and 20,100 rupees per kg, Galipelli said.

The contract traded at 19,955 rupees.