How the strengthening rupee is pushing gold prices lower in India?

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How the strengthening rupee is pushing gold prices lower in India?
The rupee is gaining against the dollar and that too at a furious pace. From levels of 68.81 to the dollar in September 2013 the rupee is back into the 50 levels.

In fact, the rupee has now closed at 59.91, a level not seen since June 2013.

India imports its gold requirements and any gains in the rupee against the dollar, translates to lower gold prices, which in turn helps reduce gold prices. Check gold rates in your city here

In the last one month gold has fallen as much as six per cent in India, partially due to a sharp gains in the rupee and also helped by drop in international prices of gold.

22 karat gold is now down to Rs 2671 per gram from levels of Rs 2833 seen on Feb 24. Similarly, 24 karat gold is down from Rs 3001 per gram to Rs 2829 per gram in the last one month.

Gold in the domestic market has now dropped by almost 8.5 per cent, since the start of the year.

The other reason for drop in gold prices in India is that international prices of gold have also seen a drop. In fact, this week saw gold prices ending at six week lows as improving economic data from the US, saw investors increasing their appetite for risk.

Gold is likely to continue drifting lower as the rupee will continue to strengthen against the dollar and as investors all over the globe look to sell gold as economic strength around the globe gathers momentum.

Hopes of a stable government led by the Narendra Modi led NDA is also likely to further strengthen the currency momentum. Clearly, those who are looking to buy gold, the next few weeks should offer good opportunities.

Read more about: gold, dollar
Story first published: Saturday, March 29, 2014, 9:08 [IST]
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