Gold recovers from lowest level, gains 2 percent

India gold futures extended gains by more than 2 percent 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 percent higher 28,360 rupees per 10 grams at 2:00 p.m., recovering from its Wednesday’s one-week low of 26,853 rupees.

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* 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 U.S. President Barack Obama to spur economic growth which could dent bullion’s safe-haven appeal.

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* The 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, proprietor 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.

Reuters