Gold and silver prices rebounded in Indian markets on Monday, driven by a weaker rupee and a rally in global bullion, after a sharp correction last week. Traders said depreciation in the rupee and strength in overseas markets revived demand for the precious metals.
Gold prices rise
Gold prices rose by Rs 300 to Rs 71,850 per 10 grams in the national capital on Monday, according to the All India Sarafa Association. The precious metal had closed at Rs 71,550 per 10 grams in the previous session. Silver also gained momentum, jumping Rs 700 to Rs 89,000 per kg.
The rebound came after a steep fall last week, when gold had declined by Rs 1,100 and silver by Rs 2,500. Analysts attributed the recovery to a weaker rupee, which made dollar-denominated bullion cheaper for domestic buyers, and a pick-up in global sentiment.
Global cues support
Globally, gold prices edged higher on Monday as the dollar eased and investors awaited US economic data for further cues on interest rates. Spot gold was up 0.3% at $2,330 per ounce in early Asian trade. Silver also traded firm, rising 0.5% to $29.50 per ounce.
“The rebound in gold and silver is largely due to a pullback in the dollar index and a rally in international markets. The rupee depreciation added to the positive sentiment in domestic markets,” said a senior analyst with Motilal Oswal Financial Services.
Rupee weakness boosts demand
The Indian rupee weakened by 12 paise to 83.58 against the US dollar on Monday, making gold imports costlier but boosting domestic prices. Traders noted that the depreciation encouraged buying after last week’s correction, as investors saw an opportunity to enter the market at lower levels.
“Weak rupee and global recovery have revived demand. Investors who were waiting on the sidelines are now actively buying,” said a bullion dealer from the India Bullion and Jewellers Association.
Outlook
Market participants are now eyeing US non-farm payroll data and Federal Reserve commentary for further direction. Analysts expect gold to remain volatile in the near term, with support at $2,300 per ounce and resistance at $2,350. In domestic markets, gold is likely to trade in the range of Rs 71,000-72,500 per 10 grams.
