The Hindu Business Line : Rupee may keep gold prices under check

Chennai, Aug. 5 Domestic gold prices could be kept under check this month as the rupee is expected to remain strong against the dollar. “The strength of the rupee remains a key factor which has depressed the prices in the domestic markets,” said Kotak Commodities Services Ltd in its outlook for gold this month.

In the global market, fundamental factors remain supportive of gold prices and increased security threat would continue to provide support. The larger fear for prices would come from the reversal in Euro/$ pair as Europe is unlikely to let its exports remain under pressure due to rising Euro.

US Economy

Technically, prices are expected to face resistance at $680 and $693 an ounce levels. The prices are expected to face support at $642 levels. If prices break the level of $635, there can be a downside price movement till $626, it said.

Investment demand in gold has picked up to some extent after falling for weeks, Kotak said. The two largest gold ETFs have shown a stronger trend as overall prices have recovered. The streetTRACKs gold shares, with nearly 80 per cent of total gold reserves, have seen their total reserves rising at a moderate pace. The addition of a number of gold ETFs in India has also added marginally to the demand side and this would be reflected in the annual demand, it said.

Gold prices could fall if the US economy shows more resilience. However, the long term fundamentals still support the prices.