The possibilities of speculators squaring off their exposure in futures markets, including Comex, Tocom and Shanghai, are also set to dampen the sentiment on the yellow metal. June gold contracts on the Comex and Tocom are expiring next week for delivery between June 1 and 5.
With the gold futures trade entering the last week, traders with open position may offload their additional exposure, said Ketan Shroff of Pushpak Bullions.
Globally, futures markets are utilised as a tool for hedging risk where less than 1 per cent of the open position is kept for delivery.
In the domestic market, gold consumers are currently staying away from fresh orders, hoping that the price will decline from the current unsustainable level. Looking at the last week's record, the current level of $930 an ounce (oz) looks speculative despite favourable fundamentals like supply disruption from South Africa.
Gold is rising because of firm crude oil prices and a weak dollar. But pressure is building on Arab countries, the suppliers of crude oil, to work extensively to ease supplies and thereby prices of crude oil in order to control global inflation.
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Any weakness in crude oil may result into a firmness in the dollar, which would ultimately affect gold prices inversely, said Shroff.
An analyst at one of the leading Indian research firms, however, sees gold ranging between $931-956 an oz in the near term, but any downward move would bring the precious metal down to the level of $763 an oz, possibly towards the third quarter of this year.
Within two-three weeks, gold may ease up to $888 an oz, said Bhargav Vaidya of BN Vaidya & Associates.
Short-term fundamentals are still in favour of gold, with the mine supply disturbances from South Africa following a majority of Zimbabwean gold mine workers in the violence-hit country having fled to their home country for safety. A couple of mines have already anticipated a shortfall in supplies this year.
But this temporary blip is likely to be overcome soon without any real impact on global gold prices, said Vaidya.
Meanwhile, the yellow metal firmed up last week by 3.5 per cent to close at $928.25 an oz. Indian consumers are facing a double whammy, with rising gold prices and a depreciating local currency.