Gold Prices Likely To Hit Rs 34,000 Level By Diwali On Weak Rupee
Mumbai: Gold prices are likely to rise up to Rs 34,000 per 10 grams level during Diwali mainly on the back of depreciating rupee and geo-political concerns, according to analysts. Gold prices are likely to hold in the range of Rs 30,000-34,000 per ten grams until Diwali in the domestic market, and internationally the yellow metal might be in $1,260-1,400 an ounce level, Gnanasekar Thiagarajan, director, Commtrendz Risk Management told PTI.
Here are key things to know:
Weak rupee: "Price would have absorbed the effect of rate hikes and rate hikes would only confirm inflationary expectations, which could increase the appeal for bullion as a inflationary hedge then. And with domestic currency poised to weaken further prices could test previous highs around Diwali," said Mr Thiagarajan.
In India, gold on June 8 closed at Rs 31,010 per 10 grams and while in New York it closed at $1,302.70 an ounce. Globally, Thiagarajan said, gold prices have been in a range being capped by rising yields and dollar, and supported by global uncertainties and geo-political tensions, but it is holding well in spite of a strengthening dollar.
Rate hike: "There is a lot of optimism in the US economy and I feel there is a possibility of rate hike. This will cap the volatility in gold. So during Diwali the gold price is likely to be around Rs 31,500 in the upper range and around Rs 30,000," said Angel Broking Chief analyst Prathamesh Malaya. In US dollar term, gold is likely to be in the range of $1,360 in the upper level and $1,200 in the lower level.
Markets correction: "Even though the equity market has boomed gold prices have held very well. This is an indication that investors are concerned of a stock market correction anytime which would be a good news for gold prices," Commodity & Currency managing director Priti Rathi.
When it comes to gold demand in the domestic market, Thiagarajan said, investment demand has been virtually absent as stock markets have been delivering good returns and conventional jewellery demand has also not seen any rise due to high prices capping demand and the buying trends also changing slowly.
Rural demand: Rural demand, however, is the only saviour going forward due to rise in minimum support price (MSP) will aid in higher incomes and spending in gold. Normal monsoon predictions could also boost overall sentiment for rural demand, he added. Meanwhile, high domestic prices kept away the Indian customers, however, they will comeback if the gold dips close to 30,500-30,000, said an expert.
(With PTI Inputs)