Gold up over 2%; physical buyers stay away

Gold up over 2%; physical buyers stay away

Mumbai: Gold futures extended gains by more than 2% on Friday, recovering from its lowest level in more than a week, following a rise in overseas markets, and a weaker rupee back home, dealers said.

The most-active gold for October delivery on the Multi Commodity Exchange (MCX) was trading 2.01% higher 28,360 per 10 grams at 2:00pm, recovering from its Wednesday’s one-week low of 26,853.

Global gold bounced back in volatile trade after hitting its lowest level, but it was heading for a weekly loss as investors digested plans by US President Barack Obama to spur economic growth which could dent bullion’s safe-haven appeal.

The Indian rupee weakened for a fifth consecutive session and touched a fresh one-year low, dragged down by the euro’s losses and continuing strong dollar demand from domestic oil refiners.

The rupee plays an important role in determining the landed cost of the yellow metal, which is quoted in dollars.

Physical buyers prefered to stay on the sidelines awaiting price dips ahead of a slew of festivals and weddings.

Demand will re-start in full swing within 15 days, said Mukul Sonawala, propreitor of wholesaler and retailer Narrondass Manordass in Mumbai.

India’s wedding and festival demand is expected to gain pace and peak in October and November before tapering off in December.