Mumbai: Gold futures rose by more than a percent on Thursday following similar trend in overseas market and a weaker rupee back home, and could extend gains in coming sessions, analysts said.
The most-active gold for October delivery on the Multi Commodity Exchange (MCX) was 0.68% higher at Rs25,848 per 10 grams, after hitting a high of Rs25,940 earlier.
“The strategy should be to buy on dips rather than remaining short due to lack of clarity on global front,” said Pinakin Vyas, assistant vice-president with IndusInd Bank, a gold importer in Mumbai.
Overseas gold jumped 1% as jewellers rushed to buy after prices dropped early in the session, but declines in other markets could cap gains as uncertainty about a resolution of Europe’s debt crisis stoked fears for global growth.
Weakness in the rupee, which plays an important role in determining the landed cost of the dollar-quoted yellow metal, also aided sentiment.
The rupee weakened as concerns over the euro zone’s debt resurfaced, prompting a sell-off in riskier assets like equities, with the local unit looking set to post its biggest quarterly loss in at least three years.
Physical buying continued as traders sought to stock for the upcoming festivals and wedding season in India, the world’s biggest consumer of bullion.
“All our centres are active as prices are close to last week’s levels,” said Vyas.