Gold prices likely to dip

Gold buyers should wait for a few more days before placing orders as prices are likely to dip in the near future. If technicals are to be believed, gold in the international market is likely to decline to the $665-level and further to $656 in London from the present level of $669.

The same trend is likely to percolate to Indian markets, but the extent of impact may not be harsh due to rupee appreciation. Bank reports suggest that the Indian currency is likely to settle at 38.50 against dollar, which means that gold prices would remain rangebound in India.

Prithviraj Kothari of Riddhi Siddhi Bullion said despite supportive fundamentals like higher crude prices and dollar's depreciation against major currencies, gold is likely to go marginally lower to Rs 50-60 in the wake of profit-booking by stockists. "Stocks are gradually being built up by investors as price recedes in the international market," he added.

"Gold buyers have been asked to refrain from booking heavily now as a better price is expected in the future," an analyst said.

Last week gold appreciated to record its biggest weekly gain in more than three months to close at $670 for the first time after the week ended February 9 when the European Central Bank said it won't sell any more gold until after September 26. This helped to boost demand for the precious metal, which rose 2.4 per cent last week.

In the domestic market, however, standard gold appreciated 2.19 per cent or Rs 190 to settle at Rs 8840 per 10 grams while pure gold moved up similarly to close at Rs 8890 per 10 grams. The yellow metal is likely to see a support level of Rs 8400 per 10 grams if the declining trend continues.

"There is no indication that the gold price would appreciate as major players are looking at stabilising regional politics," the analyst said.

In India, Hindus do not buy any precious metals and durable commodities for a month ending on June 16 as it is considered to be inauspicious. According to Hindu mythology, this extended month-long period comes once in four years, which bars Hindus from buying gold and silver.

Gold demand in India is likely to resume after the ongoing inauspicious period ends and wedding season starts. But, it is unlikely to drive demand and compensate the current decline at least in near future, a local jeweller said.

On Monday, gold for immediate delivery in Asia fell as much as 0.5 per cent or $3 to $668.75 an ounce and traded at $669.70.

The European Central Bank, one of 16 signatories of the so-called Central Bank Gold Agreement, has sold 60 tonnes since last September. The banks have agreed to sell no more than 500 tonnes a year and have shed just 290 tonnes since September 2006.

India, the world's largest consumer of yellow metal, witnessed a record quarterly growth of 50 per cent to 211 tonnes in the first quarter of the calendar year compared with 140.7 tonnes in the same period last year, thanks to higher jewellery and retail investment in the wake of sustainable global prices, according to a report by Gold Fields Minerals Services (GFMS) of the World Gold Council (WGC).