Rupee leads gold up

Even as gold prices in the global market dropped sharply last week, in the domestic markets prices didn’t correct, in fact they moved up, thanks to a weak rupee. As highlighted several times in this column, the rupee is beginning to crack due to a strong dollar. Rupee closed at 61.16, down from 60.82 in the previous week. It touched a low of 61.61 against the dollar.

Gold futures on the MCX ended at ₹26,793, up 1 per cent. MCX Silver futures, however, closed in red. They closed at ₹39,169, down 1 per cent.

With the festive season on with the start of Navratri, lower gold prices may spur jewellery purchases. Consumers planning to buy gold may well go ahead with it now. Even if gold prices continue to slide in the international market, chances are they may remain steady in India.

MCX gold/silver futures Last week, despite the MCX gold futures contract cutting the support at ₹26,400, it reversed higher from ₹26,000. The contract hit its first upside target at ₹27,000 and reached a high of ₹27,135. This week, as the rupee could decline further, MCX gold futures could rise to ₹27,300 and ₹27,580. For this, however, the contract has to first cut ₹27,200. Downside support is at ₹26,560. Breach of this level can make the contract fall to ₹26,300 and ₹26,000. MCX Silver may test support at ₹39,000 this week and fall to ₹38,500. Upside, the resistance is at ₹39,800.

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Also read: > Will gold slump further?