Mumbai: Gold prices are expected to drop toa low of Rs 23,000 per 10 gm on continuing worries over interest rate hike by Federal Reserve and stronger US dollar, analysts say. “The gold remains bearish and the prices are likely to decline to Rs 23,000-23,500 per 10 grams in a week to month time. This is mainly because the market is nervous of the outcome before July 29, when the US Federal Reserve will take a decision on rate hike. Whatever the decision, it will be negative for gold,” Commtrendz Research Director Gnanasekar Thiagarajan told PTI here.
The gold MCX on Saturday was at Rs 24,752 per 10 grams and USD 1,097.50 in international market. With the US Federal Reserve hiking the rates looking imminent, the question now is by how much and when, which is keeping the market volatile till a final decision is taken, he added. In international markets the prices are likely to weaken to USD 1,020 an ounce in a week or month, he said adding, however, it may crack below USD 1,000-level. Back home, however, the prices of gold will be cushioned if the rupee weakens against the US dollar.
At present, there is demand from stockists, who are gearing up for the coming festivals, even as the retail demand has declined, he said. Echoing similar views, Angel Broking Associate Director, Commodities and Currencies, Naveen Mathur said the prices are likely to be in the range between Rs 23,500-24,000 by the end of December. Similarly, the prices in the international market will be around 1,050 an ounce by the end of the year.
“This is mainly due to weak fundamentals like stronger US dollar, decline in investment demand, lack of physical demand. All this is in anticipation of Federal Reserve hiking the rates,” he added. Moreover, he said, as an asset class gold has lost its status as a safe haven.