Commodity Analysis

Indian gold investors remain edgy

Rajalakshmi Nirmal | Updated on November 29, 2017 Published on September 14, 2014

Indian gold investors may also have to get ready for a downhill ride. Last week, gold (24 karat) prices in the spot market dropped to ₹2,690/gram, down over 1 per cent. If the rupee stabilises around 60/61, gold prices may follow the downtrend in the global market. However, if the currency weakens due to dollar strength, the downside may be limited.

The gold futures contract on the MCX settled at ₹26,898, down 1.8 per cent for the week. The silver futures contract ended at ₹41,309, down from the previous week’s ₹41,315. Gold BeES, the largest domestic gold exchange traded fund, closed at ₹2,502 on Friday, down 1 per cent. With not much demand, the units are trading at a discount to the NAV price. The fund’s NAV on Friday was ₹2,507.8. With the festival season having begun in India, analysts across the globe are expecting revival in demand in the country — which is the second largest market for gold. In the past, Indian consumers have shown an increase in appetite for gold when prices correct.

Technical levels

Last week, as indicated, MCX gold reached its first downside target at ₹27,000. This week, prices can move down further. If ₹26,800 is cut, it can move down to ₹26,500 and ₹26,000. However, if there is a fall in the rupee, gold prices might do an about-turn. Cutting ₹27,000, prices may move to ₹27,200 and ₹27,500. MCX Silver showed some resilience and the correction was not as steep as in gold. But this week, chances are high for prices to drop below ₹41,000. If the price cuts ₹41,000, it may drop to ₹39,700. On the upside, the first resistance will be at ₹41,500 to reach ₹42,000.

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