Mumbai; India, the second-largest consumer of gold globally, is witnessing strong demand ahead of Diwali and Dhanteras.
Gold prices in India rose as international factors and domestic festive demand pushed rates higher. Spot gold internationally climbed by 0.3% to $2,667.97 per ounce. In India, the price of 24-carat gold touched Rs 77,390 per 10 grams.
In global markets, gold's appeal has strengthened due to easing US Treasury yields. The 10-year Treasury yield declined for the third consecutive session, making zero-yield assets like gold more attractive. This drop in yields is driven by expectations of future interest rate cuts by the US Federal Reserve.
In addition to monetary factors, geopolitical uncertainties, including ongoing Middle East tensions, have heightened the demand for safe-haven assets like gold.
India experienced a sharp decline in gold imports in September. It fell to $4.39 billion from a record high of $10.06 billion the previous month.
With elevated crude oil prices amid global geo-political situations, the rupee has breached the 84-mark against the US dollar for the first time.
According to trade experts, the Middle East tensions continue to be volatile and are likely to keep oil prices high and the rupee weak in the short term. Brent crude surged to $78.92 per barrel from nearly $69 on September 30.
Meanwhile, foreign portfolio investors (FPIs) have sold shares worth Rs 55,000 crore in the Indian stock market in the past nine days.
The rupee may extend its weakness towards 84.25-84.35, especially if it holds below 84.00. Support is expected in the 84.20-84.35 range, while resistance is seen between 83.70-83.80, said the market expert.
The rupee's movement has been gradual and steady, supported by the Reserve Bank of India’s (RBI) comments on its resilience and limited speculative positioning. The Indian rupee continues to be among the least volatile currencies, according to RBI Governor Shaktikanta Das.
According to experts, India's reliance on crude oil imports affects the value of the rupee. The surge in crude oil prices is primarily driven by concerns about potential supply disruptions in the Middle East.
