Gold prices on Monday regained 1% after the leaders of Germany and France, the Europe's two biggest nations reached to an agreement to recapitalize the struggling European banks.
Euro regained its value against the basket of currencies over the news. A series of good news from Eurozone can push down the US Dollar further.
Gold is generally quoted in dollar, so if the price of dollar goes down, it becomes cheaper for the rest of the nations to buy gold. So the price of gold may rise further.
Many bullion traders are expecting prices to mark above Rs 29,000 per 10 grams by Diwali due to rising demand.
On the global front, the economic crisis and slowdown is still haunting investors which may encourage them to invest in yellow metal over its safe-haven appeal.
Last but not the least, the festive and wedding season in India which may aid the prices to rise further.
The most actively traded gold contract, for December delivery opened at Rs 26,431 per 10 grams and was trading in the range of Rs 26,497 – Rs 26,500 per 10 grams at 12:40 pm.
And, the metal for February contract delivery opened at Rs 26,726 per 10 grams was trading in the range of Rs 26,760 – Rs 26,770 per 10 grams same time.
On domestic front, 24 carat gold was at Rs 26,340 per 10 grams and 22 carat gold was at Rs 24,630 per 10 grams.