Gold to test support at $1,200 per ounce
The customary gold buying on the occasion of Akshaya Tritiya might see a limited buying this year owing to limited supply, though market experts believe that the yellow metal is still a lucrative investment option for long term.
In an interview with Ajeet Kumar of Zeebiz.com, Shiv Shrivastava, MD & CEO, IGuru Research shares his views on gold price trend, outlook and fundamentals.
Is gold demand for Akshaya Tritiya likely to be subdued?
There is a tradition to buy bullions on the auspicious occasion of Akshaya Tritiya in India. We generally see a surge in physical demand during this time. This year we can expect the same trend but due to supply crunch in physical market, buying is expected to be limited.
Gold has gained nearly 10 percent in the year to date. Will the momentum gain more strength in later part of this year?
We have seen a hike in gold prices in 2014 due to some buying seen at lower levels and good demand from china. There is upcoming marriage season in India also. But I don’t believe any more hikes in gold prices. US FED Bond buying tapering, Strong Economic growth and strengthening of US dollar may continue to keep pressure on it.
Is the recent uptrend only a short-term technical respite or is the yellow metal in the process of consolidation or building base for regaining its lost march.
Gold has also remained as most desired for humans from ages, be it as prosperity or for investment purpose. Whenever there is major decline in its price, we have seen buying and the recent hike is per se its consequence. I feel USD 1200 is good support level for gold.
Recent US and Chinese data are still showing the dark side of the economy. Other emerging economies like INDIA are also struggling for a modest recovery in its economy. Are those conditions still giving gold price a hope of rally?
USA had shown some improvement in its financial conditions but china is still suffering. Indian economy is also lacking pace and losing track. Safe heaven appeal can be the main reason for increase in gold prices.
Apart from recovery, explain some more factors that are still facilitating room for an uproar?
Ornaments always remain a matter of fascination for women. Good financial conditions can encourage its physical demand. Others factors like seasonal demand and geo-political influence can also affect its prices.
Will squeeze in supply of floating gold trigger a massive rally in upcoming years?
There may be some squeeze in floating gold but I don’t think this fact can trigger the gold prices as 75% of all gold produced has been extracted since 1910 and much of the gold mined throughout history is still in circulation in one form or another.
Now, gold is moving from west to east like China. Will this trend affect the gold fundamentals?
China acquires top position in gold consumption leaving India behind. We can expect some more demand from China and India in upcoming time.
In India gold price is taking some deviation compared to overseas trend due to rupee’s volatility and import curbs. Will the current premium be more widened in coming days?
We have seen a deviation in gold prices in comparison due to deterioration of rupees versus other major currencies. Government is trying to reduce Current Account Deficit by increasing the import duty to curb gold import. If there is decline in import duty and strengthening of Rupees after election, in case of a stable government then we can surely expect a narrowing in its premium.