Gold unlikely to breach Rs 32K-mark this month: Experts
Mumbai: After gaining around 16 percent this year, gold prices are unlikely to cross the Rs 32,000 mark in the near-term due to year-end profit-booking activities and investors adopting a cautious stance amid the progress over US fiscal cliff talks, market experts have said.
"Since the last two weeks there were some corrections taking place in gold mainly due to worries over the US fiscal cliff and the year-end profit booking," Kotak Commodity Services Analyst Madhavi Mehta said here.
Looking at the current scenario, gold is likely to rule in the range between Rs 30,500 in the lower side to Rs 31,500 in the higher side per 10 grams in the near terms, she added.
On Friday, pure gold (99.9 purity) closed higher by Rs 60 per 10 grams to end at Rs 31,140 from its previous close in the Mumbai bullion market.
"At present we can also say that the prices are consolidating. But in the long run, we still believe the sentiment in gold to remain strong due to strong ETF buying globally and the US economic uncertainty," she explained.
Echoing a similar view, Commtrendz Research Director Gnanasekar Thiagarajan said there is some technical weakness due to profit taking as the year comes to an end.
Gold has firmed up by 15-16 percent during the year, so now the prices are correcting, he added.
Internationally, the US dollar strengthened in the last two days and fiscal cliff talks is negatively affecting gold, he said. The precious metal is ruling at USD 1,705 an ounce in the international markets.
In the US, the fiscal cliff is a term used to refer to the economic effects that could result due to tax increases, spending cuts and a corresponding reduction in the US budget deficit beginning in 2013 if existing laws are not changed by 2012-end.
With gold being a safe-haven asset, uncertainty about the US budget talks have recently kept the bullion's advances in check amid conflicting signals from the "fiscal cliff" negotiations.
Gold prices fall when dollar appreciates and vice-versa.
In the domestic market, policy reforms leading strengthening of rupee is likely to help gold prices establish a base but prices may not rise much, he said.
"By December-end, gold is likely to rule at Rs 31,700- 32,000 range, while internationally it may be in the range of USD 1,675-1745 an ounce range," he added.
JRG Wealth Head of Research Harish Galipeli said gold is in a correction mode as nothing major is happening to boost its price.
"The consolidation phase for gold may continue for some time. However in the long-term, the sentiments for gold remains strong," he added.
By end of December, gold is expected to rule in the range between Rs 30,000-32,000 and in the international markets it might be in USD 1,650-1,740 range, he said, adding that the prices are likely to pick up in the first quarter of the next calender year.