Mumbai: India gold futures recovered from its recent falls on Monday on short-covering and tracking strong overseas markets, analysts said.
“This is a technical bounce-back,” said Harish Galipelli, head of research at Karvy Comtrade Ltd, adding that there has been no major shift in gold’s fundamentals.
The benchmark February contract on the Multi Commodity Exchange shed around 5% last week.
Overseas gold rebounded from a two-week low on Monday after oil recovered from last week’s near-record decline, but recession worries could limit investor’s appetite for risky assets and keep bullion trade in a tight range.
Analysts said a stronger rupee may cap the upside in the yellow metal. The dollar-rupee exchange rate affects gold in India as most of the metal is imported.
The Indian rupee rallied and federal bond yields fell on Monday after policy makers took steps over the weekend including sharp rate cuts and extra spending to boost sagging growth.
February gold may trade in the range of 12,100-12,400 through the day, said Gnanasekar Thiagarajan, director at Commtrendz Research.
March silver may be confined to 16,400 per kg and 16,750, he added.