Mumbai: Gold recovered by more than a percent on Friday afternoon following global markets, and physical traders retreated seeking declines to stock for the upcoming festivals, analysts said.
Overseas spot gold pared early losses, putting it on track for its best week since February 2009 as worries about the euro zone debt crisis and global growth drive investors to safe havens.
Traders would eye the movement in the rupee for direction, which erased all early gains to trade flat. The rupee plays an important role in determining the landed cost of the yellow metal, which is quoted in dollars.
Physical buying retreated as prices recovered from the previous session’s low, dealers said.
“Buying was good enough till yesterday, but it’s a bit slower,” said a dealer with a private bullion importing bank, adding “I think a price correction is needed for that (festival buying).”
Gold demand from India, the world’s biggest buyer of the yellow metal, will gain pace in coming weeks on the back of wedding and festival demand.