India gold seen recovering from two-month low

Indian gold futures are likely to recover from their lowest level in two months, helped by a revival in domestic demand ahead of key festivals and the wedding season, with investors also eyeing the US data for direction in prices.

The most-active gold for December delivery on the Multi Commodity Exchange (MCX) was 0.17 percent higher at 31,076 rupees per 10 grams at 4:11 p.m. IST.

"Festival buying to support gold and silver. International prices are finding support at crucial supports," said Gnanasekar Thiagarajan, director with Commtrendz Research in Mumbai.

Thiagarajan recommends buying gold on dips to Rs 31,000, with a stop loss of Rs 30,950, targeting Rs 31,400.

Festival season is underway in India, the world's biggest buyer, and it will peak with Diwali and Dhanteras next month. Weddings also take place during this period.

Investors will be waiting for the US payrolls report on Friday, which could set the tone for bullion after hedge funds and money managers slashed their bullish bets in gold and silver.

Silver is likely to extend gains following the yellow metal.

"We are holding a bullish view on silver," said Subhrasom De, an analyst with Karvy Comtrade in Hyderabad.

Silver for December delivery on the MCX was 0.22 percent lower at Rs 59,573 per kg.

Buying is advised in silver at Rs 59,400-59,500, with a target of Rs 61,000 and a stop loss below Rs 58,700, said De.