Snapping its two-day losing streak, gold prices on Wednesday rebounded by Rs 120 to Rs 28,420 per ten grams at the bullion market in New Delhi on revival of buying by jewellers to meet ongoing wedding season demand even as metal retreated overseas.
Gold in Singapore, which normally sets price trend on the domestic front, fell by 0.9 per cent to $1,327.94 an ounce and silver by 1.6 per cent to $20.61 an ounce.
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The rupee has also been bolstered by inflows into equities and debt this month, despite concerns about the withdrawal of the U.S. Federal Reserve's monetary stimulus and China's economy.
Gold in London, which normally sets price trend in the domestic markets, rose by 0.1 per cent to $1,313.42 an ounce on speculation the US Federal Reserve may further cut monetary stimulus, raised demand for the metal as a safe haven.
Foreign fund flows into and out of the domestic sharemarket will continue to be key for the rupee's fortunes.
Top gainers from the Sensex pack are Asian Paints, Bajaj Auto, ITC, NTPC, L&T and HDFC, all up 2% each
Silver also dived by Rs 600 to Rs 40,600 per kg.
Silver also recovered Rs 600 to Rs 45,200 per kg on increased offtake by industrial units and coin makers.
The deficit data was the latest in a run of positive signs for the sluggish domestic economy and could put India in a better position should the Fed start tapering, than in the summer when the rupee hit a record low.
Traders said lack of buying support from retailers and jewellers who preferred to keep their activity restricted, anticipating further fall in coming days, mainly kept gold prices unchanged.
Tracking a weak trend overseas and low demand from domestic jewellers and retailers, gold prices plunged by Rs 200 to Rs 26,350 per ten gram in New Delhi on Monday.
In the broader markets, BSE Midcap index slipped 0.3% whereas the BSE Smallcap index inched up by 0.2%
Traders said sentiments turned bearish after gold fell to three-week low in global markets as a stronger dollar curbed demand after the Federal Reserve ended its asset-purchase programme because of an improving labour market.
The RBI's macroeconomic report released after the close of markets said upside risks to food inflation remain and that it expects the retail and wholesale price inflation to remain above comfort levels.
Traders said emergence of buying at prevailing lower levels by jewellers and retailers mainly supported the upside in prices of precious metals.
India's numbers have shown a reasonable amount of improvement.
Traders said fall in demand from jewellers and retailers due to end of festive season and a weak global trend where gold retreated from a six-week high as investors expected the Federal Reserve to end its bond-buying programme this week, eroding safe-haven demand, mainly pulled down precious metal prices here.
Traders said sentiments turned better after gold recovered from an eight-month low in global markets on speculation that reduced prices may spur purchases before the Federal Reserve begins a two-day policy meeting.
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However, silver held steady at Rs 42,600 per kg on scattered enquiries from industrial units.
India Ratings principal economist Sunil Kumar Sinha said the Brexit is a mixed bag for the country.
We may now be experiencing the darker side of the massive monetary stimulus of past years, said Rajan.
The US dollar index, which tracks the greenback against a basket of six major currencies, was 0.38 per cent lower at 95.41.
Gold prices plunged by Rs 410 to trade at over two-week low of Rs 27,790 per 10 grams at the bullion market on Monday.
Traders said increased buying by stockists and retailers mainly kept gold prices remain higher for the third day.
Traders said the sentiment remained bearish on stockists selling and weakening global trend as Federal Reserve signalled a rise in interest rates while further reducing monetary stimulus, boosting the dollar and curbing demand for the metal.
The dollar index, which tracks the world's reserve currency against a basket of its peers, is down 0.16 per cent at 97.58.
Concerns related to capital outflows in the aftermath of the first US interest rate hike in nearly a decade predominantly weighed on the rupee trade.
'Is baar vote jati par nahi, kaam par milega.'
Indian equity markets registered their highest single-day percentage gains since early October.
Gold in New York, which normally sets price trend on the domestic front, fell 1.2 per cent to USD 1,207.70 an ounce silver by 2.9 per cent to USD 16.56 an ounce in yesterday's trade.
Bullion traders attributed the fall in gold prices to a weakening global trend after the US added the largest number of jobs in almost three years, fuelling concerns that the Federal Reserve will move closer to raising interest rates.
The quizzing of the 48-year-old daughter-in-law of superstar Amitabh Bachchan and Samajwadi Party MP Jaya Bachchan comes weeks after her husband Abhishek Bachchan was questioned by the agency in another case emerging from the same set of papers linked to the offshore leaks case, they said.
In Mumbai, gold of 99.9 and 99.5 per cent purity traded at Rs 29,915 and Rs 29,765 per ten gram, while silver enquired at Rs 45,450 per kg.
Bullion merchants said reduced offtake by jewellers and retailers at existing higher levels and a weak global trend amid speculation that Federal Reserve may decide on cutting back asset purchases this week is likely to bring down the demand for the precious metals as a safe haven.
Sentiments remained firm in precious metals on sustained buying by jewellers and retailers to meet ongoing festive season demand.
Marketmen said apart from increased buying by jewellers and retailers to meet upcoming festive season demand, a firming global trend on speculation prices near an eight-month low will spur more buying as the US Federal Reserve begins a two-day policy meeting, also boosted the sentiment.
This year, the combined net profit of 24 index companies, which have declared their June-20 numbers, has declined by 37 per cent year on year, while their revenues, including other income, is down by 21 per cent YoY so far.
Gold in Singapore, which normally sets price trend on the domestic front, fell by 0.3 per cent to $1,180.78 an ounce.
Sustained demand for the dollar is the reason.
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