Gold may soar to $680 in 2 weeks

Gold may touch $680 an ounce by the end of the next fortnight owing to strong fundamentals. The yellow metal may reach another benchmark level at $690 in the second leap. "This is the right time for a trader to buy gold, keeping in view the wedding season demand in the country," a trader said.

But, this price rise will probably not affect the domestic gold consumers due to sudden appreciation in the Indian currency. Rupee appreciated to 43.63 against the dollar on Wednesday afternoon compared with 44.10 last evening.

"Due to currency appreciation, cost of imports come down," the trader said and added this would lower the price of gold in the domestic market.

"Fundamentals would drive demand for gold, as the returns on investment in equity and realty markets are volatile. Hence, gold is the only option for individual and institutional investors," said Prithviraj Kothari, director, Riddhi Siddhi Bullion, and member of the Bombay Bullion Association.

But, a section of traders is apprehensive about the metal's long-term view. They feel the fundamentals could change any time and any estimate for a long term may not stand correct.

Meanwhile, the yellow metal jumped 1 per cent to its highest in more than two weeks on Tuesday, driven by a rise in fund buying on the back of a weaker dollar. Spot gold hit $660.60 an ounce before easing to $659.40-660.40, against$653.30-654.30 in New York on Monday evening.

Gold prices move in the opposite direction to the dollar. The metal is seen as a hedge against oil-led inflation. At present, the dollar is down against all major world currencies, including yen.

Traders also anticipate that China may stop stockpiling foreign exchange reserves and hence the country would have no option but to invest in sustainable commodities, such as gold, where returns are assured. China already has the world's largest reserves, amounting to more than $1 trillion.

China is growing at a brisk pace, as it buys foreign currencies to keep the value of the yuan from appreciating beyond a tight trading band.