RTRS: India gold seen down on strong dollar, weak oil
MUMBAI, Dec 1 (Reuters) - India's gold futures are expected
to trade lower this week pressured by sliding crude oil and a
stronger dollar, reducing its appeal as a safe haven investment
and an inflation hedge, analysts said.
"The high chances of interest rate cuts from Euro-zone
would increase chances of a further slide in euro, which might
drag gold lower," said Pradeep Unni, senior research analyst at
Richcomm Global Services DMCC,
The slide in crude oil may add momentum to the selling
intensity, he added.
The dollar and gold move inversely with each other as they
compete for funds, while the metal follows crude oil as
investors use it as a hedge against inflation, which is driven
by oil.
Foreign gold, which also guides local market, slipped on
Monday after oil dropped, while a stream of U.S. data that
could set the tone for the dollar seems likely to discourage
investors from taking large positions. See [ID:nSP165893]
Gold prices, however, could find support from the weaker
rupee, which will make imports expensive and slow demand for
the metal, analysts said.
The Indian currency weakened in afternoon trade on Monday
as sharp losses in the share market raised concerns of further
capital outflows. It has lost nearly 2 percent in November.
Analysts said traders would be watching a slew of economic
data slated this week in the U.S., including retail sales and
the key jobs figures due on Friday to determine direction of
the dollar, and subsequently domestic gold prices.
The fall in gold prices across Asia is a sign of weakness
in the metal, said Debjyoti Chatterjee, associate
vice-president, MAPE ADMISI Commodity Research.
"We expect a volatile trading week in bullion with prices
moving lower," he added.
MCX Feb gold is supported at 12,964-12,829, while
resistance is pegged at 12,260-13,394, an analyst said.
Following are weekly recommendations for the Feb contract on
the Multi Commodity Exchange of India Ltd. <0#MAU:> in rupees
per 10 grams:
Brokerage Recommendation Stop Loss Target
=========================================================
MAPE ADMISI Sell at 13,000-13,100 13,200 12,700
Richcomm Sell at 12,980-12,990 13,260 12,661
Karvy Comtrade Sell at 13,100-13,120 13,250 12,850
* At 4.48 p.m., the Feb contract on the MCX was trading at
12,917 rupees per 10 grams, down 214 rupees over the previous
session.
(Reporting by Siddesh Mayenkar; Editing by Ramya Venugopal)
