Gold futures may fall past 1-month low

  • Reuters, Mumbai
  • |
  • Updated: May 20, 2013 12:35 IST

Gold futures in India are likely to fall past their lowest level in a month, weighed by expectations of a strong dollar, dimming the yellow metal's appeal as an alternative investment.

At 0652 GMT, the actively traded gold for June delivery on the Multi Commodity Exchange (MCX) was 1.61% lower at 25,420 rupees per 10 grams. It earlier dropped to Rs. 25,373, a level last seen on April 18.

"The trend will continue to be bearish. There is critical support around Rs. 24,250-24,500 and we could see some consolidation," said Kishore Narne, director with Motilal Oswal Commodities Broker.

Gold futures have shed about 22% after hitting a peak of Rs. 32,464 in November last year.

"Any rallies should be an exit point for short positions and better to exit longs," said Narne.

US consumer sentiment hit a near six-year high in May, showing Americans are feeling better about their financial and economic prospects, dimming the yellow metal's appeal as a safe haven investment.

Positive numbers from the US and positive global equities, together with a strong dollar could weigh on prices, said Narne.

Dollar and gold often move in opposite directions as they compete for funds globally.

Slack domestic demand could also weigh. Gold imports into India, the world's biggest buyer of the metal, have been halted after the central bank's restrictions on consignment imports came into play.

Silver for July delivery on the MCX was 4.03% lower at Rs. 40,911 per kilogram, after hitting a low of 40,749 rupees, a level last seen in November 2011.

 

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