Gold may shine on bullish oil

The yellow metal may touch $671 an ounce by June-end.

Gold prices are likely to move up marginally to $665 an ounce and further shoot up to $671 an ounce by the end of June, owing to higher crude oil prices. But, the price of the yellow metal is not likely to sustain the levels for long as high oil prices solely cannot drive the precious metal rates.

Standard gold in London was quoted at $659.65 an ounce on Wednesday, while the US crude oil was ruling high at $68.25 a barrel.

"If the price breaches the range either side, a $20 movement could be seen further in the similar direction because of other inflationary measures," said Prithviraj Kothari, director of Riddhi Siddhi Bullion, a gold trader in Mumbai.

In the domestic market, the inauspicious "extra month" is already over. But, with the beginning of the monsoon, traders expect no buying support for gold during the season.

"In a country like India, where more than 60 per cent of the farmers depend on agriculture for their livelihood, farmers sell gold to buy farm inputs. Therefore, there is little chance that any buying sentiment would prevail three months down the line," said Bhargav Vaidya of B N Vaidya & Associates.

Market participants feel festivals such as Raksha Bandhan would attract gold consumers, but not to the extent that Akshaya Tritiya does. Hence, the trading on such occasions and a 15-day, short wedding season during the monsoon would leave no mark on the prices, added Vaidya.

Gold's failure to test the $700 level has disappointed investors, benefitting bargain-hunters and jewellers, who have gained from weaker prices of the yellow metal. Gold, these days, lacks a definite trigger as the US economic data and the prices of dollar and oil were little changed during the past weeks.

Investors, however, remained watchful for any news triggers that help drive up the prices, at least for a short period, as the depreciating dollar against major currencies may not go on for long.

Meanwhile, the yellow metal steadied to trade just below the previous day's two-week high on Wednesday and analysts said a breach of the key technical levels might provide upward momentum. Spot gold was quoted at $659.85-660.45 an ounce on Wednesday compared with $660.70-662.20 in New York late on Tuesday, when it rose to $661.40, its highest since June 7.

In the domestic spot market, standard gold closed on Wednesday at Rs 8,760 per 10 grams, up by Rs 60, while pure gold settled at Rs 8,805, up by Rs 65 from the previous day's close.

On the MCX, on Wednesday, gold for Augsut delivery closed Rs 2 higher from the previous day's close at Rs 8,849, while gold mini for the same month settled at Rs 8,857.