Gold may lose some shine; stronger rupee seen bringing prices down

Gold may lose some shine; stronger rupee seen bringing prices down
Comment E-mail Print Share
First Published: Tue, Oct 14 2008. 12 17 AM IST
Updated: Tue, Oct 14 2008. 12 17 AM IST
Mumbai: Gold prices in India are likely to fall this week after scaling life-time highs in the previous week, with the rupee expected to strengthen making the dollar-priced gold cheaper, analysts said.
“The foreign markets are very volatile and directionless. It is the rupee that is seen bringing gold down,” said T. Gnanasekar, director of Commtrendz Risk Management Services Pvt. Ltd.
On Friday, gold futures on the Multi Commodity Exchange of India Ltd (MCX) struck a life-time high of Rs14,320 per 10g with the rupee at an all-time low amid massive stock market falls.
However, on Monday, the rupee managed to claw back gains after finance ministerP. Chidambaram said the government was working on more measures to improve liquidity in the wake of a global economic rout.
Analysts said a slightly better outlook for stock markets could lead to some flight out of gold this week.
“The coordinated central banks’ move to shore up the system is likely to result in traders attempting fresh re-entry into the equity markets,” said Pradeep Unni, analyst at Richcomm Global Services DMCC.
“This, coupled with sliding oil prices and weak economic growth progress in key nations, is likely to keep gold subdued.”
India’s festival buying for Diwali is expected to remain tepid with prices being seen as too expensive and not likely to give the metal a boost, Unni added.
But a flip side view suggested more bad news on the economic front could keep the safe-haven buying in gold intact with a possible retest of last week’s Rs14,000-per-10g level.
“Already, there has been so much of fund inflows into the financial system, but the situation still remains uncertain... I expect the safe-haven buying in gold to continue,” said Subodh Gupta, analyst at Anand Rathi Commodities.
Economic indicators being watched this week include producer prices, consumer prices and consumer sentiment, the analysts added.
Comment E-mail Print Share
First Published: Tue, Oct 14 2008. 12 17 AM IST
More Topics: Gold | Rupee | Price | Stock Market | Diwali |