Gold seen falling further this week amid strong dollar demand

Gold futures in India are likely to fall further, weighed by a strong dollar and as investors chase riskier assets like equities.

The dollar and gold often move in opposite directions as the two compete for funds globally.

Investors are waiting to see the impact of the US spending cuts known as the "sequester", although the $85-billion cuts, a fraction of the federal government's total spending of $3.7 trillion, are unlikely to become a huge drag on the economy.

"We are still holding a downside view in gold and silver due to US budget cuts. Money is generally flowing out of commodities," said Subhrasom De, an analyst with Karvy Comtrade in Hyderabad.

Local gold is down about 4 per cent this year, pressured by perceptions that stocks and other higher-yielding assets may offer better return as global growth recovers.

At 04.00 p.m., the actively traded gold for April delivery on the Multi Commodity Exchange (MCX) was 0.28 per cent lower at Rs 29,657 per 10 grams.

Copyright @ Thomson Reuters 2013