Bullish on bullion, analysts see Rs10,000 per 10gm by year-end

Bullish on bullion, analysts see Rs10,000 per 10gm by year-end
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First Published: Tue, Oct 09 2007. 12 09 AM IST
Updated: Tue, Oct 09 2007. 12 09 AM IST
Mumbai: Gold prices will near the Rs10,000 per 10gm mark by December-end, riding on the back of the yellow metal’s safe haven appeal, amid persisting global financial worries, bankers and analysts said.
A Reuters poll of 15 banks and brokerages forecast gold prices at Rs9,800 level at the end of December, and a further rise to Rs9,955 at the end of March 2008.
The respondents estimated the average price of gold in 2007 at Rs9,200.
“We are betting on a weak dollar, slowing down of the US economy, and therefore money flowing into hard assets such as gold,” said Rajini Panicker, head of research at MF Global Commodities India Pvt. Ltd, who forecast gold above Rs10,000 by the year-end. Dealers in bullion banks said the weakness of the US dollar is the biggest reason for bullish forecasts for gold.
The dollar index, a gauge of the greenback’s value against a basket of major currencies, touched an all-time low of 77.66 last week week, amid expectations of more interest rate cuts in the US. A weaker dollar makes for stronger gold prices overseas because the two generally compete for the wealth of investors.
The dollar started to depreciate after the US Federal Reserve on 18 September announced a rate cut of 50 basis points that was meant to shield the US economy from housing and credit market problems.
However, a stronger rupee against the dollar in the local market is likely to keep gold’s gains subdued because most of the metal is imported and therefore priced in dollars.
“I think the rupee can go towards Rs39.20 per dollar by December,” said a gold dealer at a large state-run bank who did not wish to be identified. “So rupee prices of gold may not show as much appreciation as what could be seen overseas.”
On Monday, ICICI Bank Ltd quoted Rs9,552 for l0gm for gold—up from Friday’s quote of Rs9,496. REUTERS
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First Published: Tue, Oct 09 2007. 12 09 AM IST