Rupee Strengthens, Gold Surges Amid Global Economic Shifts

New Delhi, May 19: The Indian rupee opened stronger on Monday, gaining 12 paise to trade at 85.44 against the US dollar, supported by global economic cues and a retreat in the dollar index. The domestic currency had closed at 85.52 per dollar on Friday.

The appreciation in the rupee comes amid a rebound in gold prices, which surged above $3,220 per ounce in international markets. The rise follows last week’s sharpest weekly decline in six months and is attributed to renewed safe-haven demand after credit rating agency Moody’s downgraded the US sovereign credit outlook, citing growing fiscal imbalances and escalating debt costs.

In the domestic market, gold futures rallied, reflecting the global trend. The Multi Commodity Exchange (MCX) June 5 contract was trading 0.95% higher at ₹93,317 per 10 grams in morning trade. Silver too saw upward movement, with resistance levels expected at ₹95,950–96,650 per kilogram and support at ₹94,480–94,850, according to commodity analysts.

Rahul Kalantri, Vice President of Commodities at Mehta Equities, noted that gold prices were being supported by a weaker dollar, which slipped 0.3% on Monday, making bullion more attractive for holders of other currencies. “Gold has technical support at $3,195–3,175 and resistance at $3,245–3,260. In INR terms, support is at ₹91,850–91,480 and resistance at ₹92,850–93,490,” he added.

Despite easing geopolitical tensions—particularly a temporary US-China tariff truce and reduced friction between India and Pakistan—analysts believe gold prices are likely to remain elevated. The upcoming wedding season in India is also expected to fuel domestic demand, limiting downside pressure on prices.

Aksha Kamboj, Vice President of the India Bullion and Jewellers Association (IBJA), said domestic buying remains resilient. “While international cues have led to some consolidation in prices, the seasonal demand ahead of the wedding season will keep prices firm in the Indian market,” she said.

With weak US economic indicators and subdued inflation data increasing the likelihood of further interest rate cuts by the Federal Reserve, gold and silver are expected to remain attractive to investors seeking safe-haven assets.