Mumbai: Gold reversed morning gains to fall more than a percent on Friday following similar trend in overseas markets, although the Indian rupee, which hit its lowest level in 28 months, kept the downside limited, dealers said.
The most-active gold for October delivery on the Multi Commodity Exchange (MCX) was 0.34% lower at Rs 27,820 per 10 grams at 12:26 pm, after hitting a low of Rs 27,610 earlier.
Prices are down about 3% from the contract high of Rs 28,744 struck 6 September.
The most-active US gold futures contract reversed course and fell more than 1 percent to $1,722.3 an ounce on Friday, extending a drop of 3.7% in the previous session.
A weaker rupee dented gold demand. The rupee plays an important role in determining the landed cost of the yellow metal, which is quoted in dollars.
“Rupee is in a different zone at the moment and is unexpected, import is getting affected why only gold,” said Pinakin Vyas, assistant vice president with IndusInd Bank, a gold importer in Mumbai.
Festival and wedding demand is expected to gain pace and peak next month in India, the world’s biggest bullion consumer.
“There are stray deals, which is only need based... People will take time to digest these prices,” said Vyas.