Spot gold was down 0.2% at $1,670.40 per ounce by 0926 GMT, after dropping as much as 1% in the Asia session.
The rupee hit a new low of 80.47 versus the US dollar in the first few minutes of trade on Thursday.
The dollar surged to a fresh two-decade high and Asian stocks hit a two-year low on Thursday as the prospect of U.S. interest rates rising further and faster than expected spooked investors
Putin's call for partial mobilisation hits risk appetite in currency market
Ajay Argal of Franklin Templeton believes that any change in stance to lower the pace or the quantum of rate hikes could provide an interim positive trigger for the markets.
The mobilisation of troops by Russian President Vladimir Putin piled on more pressure on the rupee, already weighed by the surging dollar index
Financials and pharma stocks led the advance amid positive flows from foreign portfolio investors
The benchmark US 10-year Treasury yield hit 3.58%, its highest level since April 2011; Ford sees additional $1 bn in inflationary costs, shares fall
FPIs turned net buyers in July after nine straight months of massive net outflows, which started in October last year
Crude has dropped substantially after a surge close to its all-time highs in March after Russia's Ukraine invasion added to supply concerns, pressured by the prospects of recession and weaker demand
Meanwhile, International Monetary Fund chief Kristalina Georgieva said on Wednesday central bankers must be persistent in fighting broad-based inflation
The broader focus however remained squarely on the risk of rising interest rates and painfully high energy prices causing recessions
Higher US interest rates typically leads to a stronger dollar and reduces the appeal of emerging market assets for global investors
The dollar index eased 0.4% on Wednesday, making gold less expensive for overseas buyers
U.S. commercial oil stocks are expected to have fallen for five weeks in a row, dropping by around 200,000 barrels in the week to Sept. 9, a preliminary Reuters poll showed on Monday
"Economic data and investor positioning are more important factors for risky asset performance than central bank rhetoric," the strategists wrote. "We maintain a pro-risk stance"
The US labor market has remained strong this year, with employers adding 315,000 jobs in August, a robust gain
The European Central Bank is due to meet later this week, where it is expected to deliver a large 75 basis-point interest rate hike to tame record high inflation
The growing bullish chorus points to a reopening of Southeast Asia that's bringing back a swarm of tourists, as well as booming domestic demand that's helping shield it from a global slump
CLOSING BELL: Reliance Industries tanked 3 per cent today, contributing nearly 30 per cent of the losses on the Sensex