Mumbai: Gold futures traded higher buoyed by a recovery in crude oil and a weaker dollar, but gains may be capped later in the session due to a firm rupee, analysts said.
“Technically, the trend is weak, though a bounce to Rs13,030 cannot be ruled out,” said Dharmesh Bhatia, a technical analyst at Kotak Commodity Services in Mumbai.
The benchmark gold February contract traded Rs93 higher at Rs12,880 at 11:37am, after falling 4.8% in the previous six sessions.
A stronger crude enhances gold’s appeal as a hedge against inflation and a weaker dollar increases the yellow metal’s appeal as an alternative to the greenback.
“Gold’s rally may be shortlived and we expect selling pressure at higher levels,” said KN Rahaman, deputy research head, Way 2 Wealth Securities, adding a bounce-back is possible to Rs13,000 in a couple of days.
Gold has strong support at Rs12,700, Rahman added.
Selling is recommended at Rs12,855-Rs12,900 with a stop loss of above 13,000 and with a target of Rs12,710, Bhatia added.
Open interest for Feb gold on MCX was at 13,734 lots, down from 13,856 a day earlier. Volume on Thursday was 58.6 kgs.