Gold tumbles below Rs 29,000; rupee gains on global cues

As risk aversion fades in global markets with rising equity indices, gold prices tumbled below Rs 29,000 to touch a six-month low of Rs 28,800 per 10 grams in the bullion market on Tuesday.

Also, prevailing cash crunch owing to demonetisation took its toll on the pricing of the yellow metal. According to traders, offtake by jewellers have seen considerable fall at the domestic spot market after the government banned high-value currencies on November 8 to check the flow of black money in the system. With few buyers in the market, stocking by jewellers has seen a significant dip in recent weeks.

On the global front, rising risk appetite of investors for equities pulled down gold prices. Gold price fell 0.60 percent to $1,170 in New York on Monday. Prices of silver also fell by Rs 100 to touch Rs 41,100 per kg in domestic market on low industrial buying.

Meanwhile, the Indian currency strengthened by 30 paisa (4.25 pm) to trade at Rs 67.91 per US dollar on Tuesday with increased selling of dollars by banks and exporters.

Analysts also said that rupee took cues from equity market, which sustained its uptrend for the second day in the week. Weakening dollar globally also supplemented the appreciation of rupee. As monetary policy committee started deliberations on future course of monetary policy on Tuesday, analysts said direction of Indian rupee will be largely determined by the future guidance given by the RBI.