The Hindu Business Line : Gold price poised to top $1,000

Chennai, March 2 Gold continued its glittering run last week, gaining 3 per cent and towards the weekend, it was almost in a galloping mood. Helping gold were factors such as the four-month high inflation witnessed by the US, fall of the dollar and fears that inflation may rise further.

Overall, the yellow metal has gained 16 per cent since the beginning of this year and along with it, silver has also had a good run. It ended near $20-an-ounce mark during the weekend.

Impending crisis

Analysts are unanimous in their view that gold is gravitating towards $1,000 and it may happen this month.

What has happened with last week’s upward momentum is that gold has now found a firm support between $953 and $961, after having closed at $974.50 for April delivery.

It has been reiterated time and again that the US economy, the interest rate cuts announced by the Fed besides pumping of currencies were all pointers to an impending crisis and therefore, gold was firmly headed towards $1,000. And going by the panic that gripped the US stock markets, there should be no surprise if that event takes place this week.

According to Mr Anuj Goel, analyst with Kotak Commodity Services Ltd, the yellow metal is headed for $1,025-1,030 range. His view is that raging crude and the euro-dollar equation could take gold to further highs. But there is a word of caution in that the dollar-yen has broken the crucial support of 104.

Back home, the waiver of farmers’ bank loans and raising of the income tax limit, which could see extra money in the hands of the households, are factors that can trigger demand for the yellow metal, besides, of course, white goods.

Gold appetite is never satiated in India, where the precious metal is valued the most. But the moot point is how many would have the courage to buy at prices of over Rs 12,500 for 10 gram. Still, with the marriage season ahead and a couple of festivals coming up, there could be some purchases.

With returns from gold being much higher than those from stock markets, that should see interest in its investment also. Therein, lies a reason for some more demand, not to forget the upcoming harvest season. The bottomline is that gold will continue to retain its sheen.

For those interested in technicals, gold will face resistance near $981 and then after $1,000. Supports for it are first at $954 and then at $939.

Silver will follow gold and it could also top $20 this week. Resistance is seen at $20.10, support at $19.33 after it closed at $19.875 during the weekend.

Crude, which has also had a run to a record $103 a barrel last week, could see some cool-off effect but March, analysts say, is always a time when it historically rises. Coal is likely to rule firm, while metals could witness profit-taking.

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