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.

Shares of the exchange-traded funds that hold the metal,

iShares COMEX Gold Trust

(IAU) - Get Report

and

streetTRACKS Gold Shares

(GLD) - Get Report

, were moving slightly higher by mid-afternoon.

The Amex Gold Miners index was drooping 0.7%, dragged down by

Iamgold

(IAG) - Get Report

and

Kinross Gold

(KGC) - Get Report

, each off almost 3%.

In base metals, contracts for December delivery of copper traded up four-tenths of a cent to close at $ 3.4475 a pound on the Comex.

Among the miners, Brazil's

Companhia Vale do Rio Doce

(RIO) - Get Report

extended its offer to buy Canada's

Inco

(N)

until Oct. 16, extended from the previous deadline of Sept. 28.

CVRD shares were recently down 1.8% to $19.66, while Inco stock was off a penny at $76.16.

Elsewhere, UBS downgraded steel companies

Nucor

(NUE) - Get Report

and

U.S. Steel

(X) - Get Report

to reduce from neutral; Nucor was recently off 0.2% to $46.85, while U.S. Steel was down 1.2% to $55.07.

Meanwhile, Friedman Billings Ramsey slashed its price targets for aluminum smelters

Alcan

(AL) - Get Report

to $40 from $51 and

Alcoa

(AA) - Get Report

to $25 from $33; shares of both firms were recently off 0.1% in reaction.