MUMBAI: India gold futures may tread lower this week on improving risk appetite for stocks and on hopes the rupee may strengthen, with traders
awaiting the outcome of a Fed meeting on interest rate, analysts said.
A strong equity market signals economic recovery and investors would move out from the safe haven asset.
"Accelerated gains in stock markets may drag gold lower as investors re-enter the equity markets with rejuvenated confidence of easing financial and banking crisis," said Pradeep Unni, senior research analyst, Richcomm Global Services, Dubai.
"Our view is bearish in near-term due to increasing risk appetite," said Tejas Seth, a senior research analyst with SMC Global in Delhi.
"Since rupee is also strengthening, traders would be on the bearish side," said Gnansekar Thiagarajan, director with Commtrendz Research in Mumbai. A firm rupee makes the dollar-quoted gold cheaper.
Analysts said traders would closely await the Federal Open Market Committee's (FOMC) outcome on interest rate on Wednesday to gauge direction in dollar and precious metals complex. See [ID:nN15706029]
Dollar and gold prices usually move inversely as they compete for funds, but the relationship has weakened in recent sessions as the global economic crisis has led to safe-haven buying in both.
The benchmark April gold contract extended losses and traded 0.59 percent lower at 15,225 rupees per 10 grams at 5:12 p.m., after hitting a low of 15,210 rupees earlier. The contract shed 1.3 percent last week.
"Technically as well its not giving any bullish signs," said Thiagarajan, adding gold may be in the range of 15,045-15,350.
Supports are pegged at 15,190/15,010, said B.G. Manjunath Prasad, a technical analyst with Way 2 Wealth Securities.
