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M.R. Subramani

Chennai, March 30 Gold, as was expected, witnessed volatility during the last week and the trend is unlikely to be different this week.

During the middle of last week, gold gained sharply and nearly touched $950 an ounce, before profit booking set in and pulled it back to $934.25. As had been predicted, gold will go through sharp ups and downs.

Nothing has changed during the course of the week that can be termed as path breaking for gold’s course to change. The same situation, realities remain and, therefore, analysts are unanimous in their view that gold’s long-term prospects are good.

However, in the short term, gold could turn a bit negative and will continue to be wobbly. It might see sideways and range-bound movement this week.

Dollar’s zig-zag movement is one that’s keeping gold volatile, but the US economy doesn’t hold promise. A crucial driving factor is likely to emerge for gold this week, when India is set to witness beginning of the rabi or winter crop arrivals. Though the Indian Government has been trying hard to hold prices of various commodities so that inflation, currently at over 6.5 per cent, is under control, indications are that it is easier said than done.

The reasons are simple. The Centre has raised the minimum support prices (MSP) for various crops and most of them are ruling above MSP. The Government may not be able to bring down the prices but at the most, it can peg them at the current levels.

With expandable income among Indians on the rise, one wonders how the Government could slowdown growth rate to tame inflation. What this could mean is that farmers, too, will have extra cash to spend.

With the marriage season round the corner and increased cash, gold could be the gainer.

Though gold imports into the country declined during January and February, the yellow metal is still in demand.

Any sharp fall in the prices is seen, in global and domestic markets, as a buying opportunity. In these circumstances, gold is likely to rule firm.

According to Mr Anuj Goel of Kotak Commodity Services Ltd, gold has bounced back from $900 level and it is seen as an excellent buying opportunity. Gold has a major support at $918-920 and then at $900 this week. The yellow metal could face resistance at $967-970 and a break above this could take it to $979-$983 levels. The metal is seen range-bound during the next few trading sessions.

Silver, which has pulled away from the support of $16.5-$16.6, faces resistance at $18.48-$18.5 and then at $19-$19.19 levels.

On the downside, it is seen supported at $17.4-$17.6, according to Mr Goel, who sees the crucial support at $16.19.

On the other hand, Angel Broking, in its outlook, sees resistance for gold at $958-$972. Silver’s support is at $17.90-$17.50 and resistance is at $18.6-$19.18.

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