After witnessing an unabated rally, gold prices are likely to see some correction on the back of possible profit booking in the market, say market analysts.
“There is possibility of correction in gold prices due to profit booking. However, it will not sustain for long. In the long run, the outlook for bullion market is bullish as crude prices are soaring and dollar is weakening. Moreover gold has now become a safe investment asset against inflation,” said Naveen Mathur, associate director, Commodities and Currencies, Angel Broking.
According to Navin gold will come down to Rs. 16,500 to Rs 16,600 by end of December and it will again go up to Rs 17,500 in upper range. Physical demand is declining but the investment in gold is moving up.
Gold ETF is giving lucrative return so it is quite possible that investment in ETF will increase.
“Recovery in dollar is seen, which may correct prices of bullion items. If gold breaks $ 1100-1110 levels in international market, it will go down to $ 1020-1025. Profit booking will come as dollar recovers in coming days. Market is currently keeping a close eye on Fed meeting in US, which is in February 2010. In Indian market, gold will dip to Rs.15,800-16,000 when correction happens,” said, Ajay Kediya of Kedia Commodities Mumbai.
Aram Shishmanian, CEO of World Gold Council, said in a press release: “In the official sector, we expect to see a continuing trend of central banks diversifying their dollar exposure in favor of the proven store of value represented by gold.”
As per World Gold Council, third quarter demand in India continued to improve from the exceptional lows witnessed earlier in the year with jewellery demand up 27% quarter on quarter, although this partly reflected a seasonal improvement.
Jewellery demand, of 111.6 tones, was down 42% on year earlier levels, while net retail investment demand of 26.0 tones was 67% lower. Absolute levels of demand remained relatively weak on a historical basis.