Gold prices to remain volatile
Indian analysts had mixed views on gold this week ahead of a slew of economic indicators in the US that promised to keep the markets volatile.
“The trend is confusing... the currencies are keeping it volatile,” said an analyst at IL&FS Investsmart Commodities Ltd, who recommended only intraday positions to narrow down risk. The dollar, with which gold generally has inverse relationship, was stronger on Monday in the overseas markets, but several US indicators were under watch to confirm whether the economy can stave off recession, analysts said. Meanwhile, the rupee unexpectedly strengthened, after a 13-month low on May 22 that impacted gold prices. The rupee’s value against the dollar affects gold, as most of the commodity is imported and paid for in dollars.
Indicative data this week will include the manufacturing index, factory orders, jobless claims and construction spending in the US Crude oil, that usually signals inflation and boosts the safe haven appeal of gold, was also giving gold a leg up, some analysts said. “Crude oil’s correction is overdone, and because inflationary fears remain, gold could rise,” Somnath Dey, incharge-metals and energy research, at Religare said. But another analyst said crude oil had more steam to rise after its recent rally that saw prices climb above $135 a barrel. “We can expect some bargain hunting to take place,” as crude oil has fallen, said an analyst at Motilal Oswal Commodities Broker Pvt Ltd. US crude oil fell more than a dollar to near $126 a barrel as a tropical storm weakened. (The Economic Times)
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