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Gold prices likely to dip on profit booking

This article was posted on Feb 22, 2009 and is filed under Press Releases

NEW DELHI: Gold, considered a safe haven for investors, may see a slight correction during the week in the futures market to hover around Rs 15,400 per 10 gram level on the back of profit booking, according to analysts.

“The precious metal may take a correction as the precious metal is overbought at the moment and the prices trade in the range of Rs 15,400 per 10 gram level as people are booking profit taking advantage of the high price,” brokerage firm SMC Global Vice President Rajesh Jain said.

Gold touched a record Rs 15,750 per 10 grams on February 19 in Delhi spot market, after scaling an intra-day high of Rs 15,800 per 10 grams.

Jain further said that in the international market gold, which breached the 1,000 dollar an ounce mark yesterday on New York Mercantile Exchange (NYMEX), may trade at $ 950 an ounce level.

Gold August contract closed at Rs 15,875 per 10 grams, down by 0.42 per cent on Multi Commodity Exchange (MCX).

He said gold remains bullish in long term and if the equity market does not pick up the prices will continue to go northward.

Echoing his view, Bonanza Head Commodity Research Tarun Satsangi said movement in gold was stagnant from 1998-2001. “Prices started moving upwards only after 2001, so people are taking advantage of the current price trend.”

Satsangi said, in long term gold remains bullish and prices will soar further if it breaches $ 1032 an ounce mark, which was a lifetime high made in May 2006.

However, Religare Commodities Metals and Energy Research In-Charge Somnath Dey said it is difficult for gold to take correction at the moment and it remains bullish both in the near and long terms.

He said, as gold is recession proof and absorbs all macro economic shocks it is likely to trade at Rs 16,200 per 10 grams level in the domestic market this week.

At the NYMEX, gold may hover around $ 1,032 an ounce level, he added.

On people selling there old jewellery taking advantage of the current trend, Dey said the jewellery market constitutes only one per cent of the gold market and its performance does not have impact on the price movement of the precious metal. Meanwhile, gold lost some of its sheen in the futures market and it shed Rs 50 per 10 grams

In the national capital standard gold and ornaments fell by Rs 50 each at Rs 15,650 and Rs 15,500 per 10 gram, respectively on Saturday, while sovereign gained Rs 100 to Rs 12,400 per piece of 8 gram in scattered small deals.

Jewellery shops were almost deserted with customers preferring to stay away from buying at high levels. The ongoing marriage season also failed to lift the sentiment.

source: Economictimes

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