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Correction in gold price soon, say observers

Last Updated: Wednesday, November 18, 2009 - 18:50

New Delhi: Blaming a rush of investor-buyers
for pushing gold price to over Rs 17,000 level, market
experts see the yellow metal getting cheaper by about Rs 500
per ten gram by next week on profit-booking.

Investors are expected to book profits after the recent
record-breaking rally, and would come down to below Rs 17,000
level soon, according to analysts.
"The precious metal is highly volatile at the moment.
However, this trend may last till this week before taking a
consolidation. Gold prices are likely to take a correction
after Friday to Rs 16,900 level," said Religare Commodities`
metals and energy in-charge Somnath Dey.

Gold on MCX for December delivery was trading at Rs
17,131 per 10 grams today. The yellow metal today hit a new
record at the New York Mercantile Exchange at USD 1,148.10 an
ounce (28.34 grams) for the December delivery following a 0.37
per cent dip in the dollar index.

The price volatility is mainly on account of continued
weakness of the dollar and the recent selling of 200 tonne
gold by the IMF to the Reserve Bank to raise money for lending
to poorer countries, he said.

According to brokerage firm SMC Global`s Rajesh Jain,
gold is likely to consolidate within the Rs 16,800-17,400
range in the domestic market as it is overbought now. At the
moment high prices are getting support from weakness in the
American greeback.
In the international market gold may trade between USD
1,090-1170 an ounce range, he added.

The spike in gold price is also attributed to the reports
to the effect that many central banks are showing interest in
increasing their reserves, a bullion analyst at Karvy Comtrade
pointed out.

He said, recently the Mauritius government bought two
tonne gold from IMF and Sri Lankan also disclosed that it has
been gradually buying gold to increase its reserves, which all
together helped spike th price.

The price, he said, is likely to find support at Rs
16,700 per 10 gram and resistance at Rs 17,150.

Bureau Report

First Published: Wednesday, November 18, 2009 - 18:50

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