Last Updated : 30 April 2013 at 11:50 IST
Come May 13 and the occasion of Akhsaya Tritiya is here!
Indians in general consider this to be a very auspicious opportunity to purchase gold. Now that gold prices are relatively subdued, the upcoming occasion may support the futures until then.
“When gold prices dipped a fortnight back, the physical demand shot up. One has to note that, on the Comex, futures shed as much as 300-350 dollars in a relatively short span.” said Manoj Kumar Jain, President Commodity & Forex Business, IndiaNivesh Commodities Pvt. Ltd.
The physical demand during Akshaya Tritiya as well as during the run up to the said day is likely to promote enhanced buying in India. This would support gold prices to a major extent, noted Jain.
And subsequently?
“See, if the futures fail to close above the $1485 levels on the Comex on a weekly basis, then prices are most likely to witness levels at 1340-50,” Jain added.
Traders on MCX can sell futures at around 27400-500 for the stop loss of 27800 for target near 26500-600. The scenario looks least encouraging for gold prices.
Currency is also a factor that may help the futures to the downside.
“We expect the Reserve Bank of India to cut rates by at least 50 basis points. Such a move can take Rupee to 53.5 against US Dollar," Jain noted. This too can prompt a downtrend in gold.
On the macro front, the US and Europe data as well as data from China would drive the futures. “The current lack of strength exhibited by the USD is supporting gold by a major degree,” said Martin Patrick, an economist based out of South India's Kochi.
“The weakness in crude oil is also a dampening factor,” he added. It may take one month before further indications on this front would arrive, he added.
Gold prices recovered last week, ending the week above the $1450/oz level, after hitting their lowest level since February 2011 the week prior.
Although ETP outflows continued to put pressure on prices, a surge in coin sales at various Mints, coupled with strong physical demand from both China and India, persisted in response to the lower price environment.
Investors cut gold-backed ETP holdings to 2,283.6 metric tons on April 26 even as hedge funds fielded bets against gold in a record way. Reports suggest that there had been 69,726 so-called short contracts as of April 23.
Meanwhile reports from Bloomberg quoting a technical analyst said Gold price on the Comex may dip by 11% and can come down to as low as $1300/oz. The metal has been unable to close above the 20-day moving average of $1480 and this may facilitate the drop.
No comments:
Post a Comment