Rupee weakness may restrict fall in gold prices at Rs 29,000
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Rupee weakness may restrict fall in gold prices at Rs 29,000

Last Updated: Sunday, July 8, 2012, 14:02
 
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Rupee weakness may restrict fall in gold prices at Rs 29,000
Mumbai: Even as gold prices have eased globally due to strengthening of US dollar, weakness in rupee against the greenback is likely to cushion fall in prices of the precious metal in the domestic front at about Rs 29,000 per 10 gm level, say experts.

"The US dollar gained strength after non-farm payroll data released was neutral.
This is likely to keep gold prices bearish in international markets. But in domestic markets the continuing weakness of rupee against USD is likely to restrict the fall at Rs 28,500-29,000 level by July-end," Commtrendz Research Director Gnanasekar Thiagarajan said.

The neutral payroll report implies there is no need for Federal Reserve to infuse funds to boost growth, he said.

This slight weakness in gold prices in the domestic market may boost jewellery demand in the country, he added.

Going by the positive sentiment of the US dollar, gold that is sensitive to central banks' monetary policies is likely to trade at USD 1,450 level by end of this month in the international markets, Thiagarajan said.

The MCX gold for October delivery on Friday closed at Rs 29,933 per 10 gm on Friday, while the US gold futures for August contract was at USD 1,578.90 an ounce.

The rupee on Friday lost 45 paise to end at 55.42, falling for third day in a row, despite reported intervention by the Reserve Bank as demand for the dollar rose.

Experts believe that rupee is likely to be in the range of 54.50-55.70 to the dollar.

Echoing a similar sentiment, Naveen Mathur, head at Angel Commodities said the rupee, which will continue to depreciate against the greenback, is likely to be very crucial for the movement of gold prices.

"Gold is likely to be in the range between Rs 29,500 and Rs 29,900 level in the domestic market," he said.

In the global markets, the yellow metal is likely to continue to trade in the USD 1,600 level for quite some time, he said.

PTI



First Published: Sunday, July 8, 2012, 14:02


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