Gold futures are likely to extend gains from the highest level in more than a week helped by increased safe-haven bids, with weak physical demand back home weighing on sentiment.
At 5.54 p.m., the actively traded gold for April delivery on the Multi Commodity Exchange (MCX) was 0.59 per cent higher at Rs 29,549 per 10 gram, after hitting a high of Rs 29,644, a level last seen on March 7.
"Gold will find safe-haven bids on the back of the Cyprus problem in euro zone," said Gnanasekar Thiagarajan, a director at Commtrendz Research.
The euro zone agreed on Saturday to hand Cyprus a bailout worth 10 billion euros, but required the country's savers to pay up to 10 per cent on their deposits, shaking confidence in banks across the continent.
Slack physical demand from our country, the world's biggest buyer of the metal, could keep the upside limited.
The country has been trying to curb imports of gold, which has been called a dead investment by the federal government, to put a lid on record high current account deficit (CAD) by raising import duty by 50 per cent to 6 per cent in January.
Silver for May delivery on the MCX was 0.04 per cent higher at Rs 54,218 per kg.
Copyright @ Thomson Reuters 2013