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The current week leading up to Janmashtami over the weekends, will see gold prices oscillate between a range of current levels with a short-term outlook for sideways to negative bias.
India markets are likely to open lower amid weak cues from global as well as in the futures markets. MCX October futures opened negative and traded around Rs 37,706, down by Rs 117 or 0.3 per cent. The prices on a sustained decline since August 12, when the same contract quoted at Rs 38,241.
CME Gold for August delivery fell by about $ 3 in Tuesday early session to trade at $ 1497.5 an oz. Technically, analysts see a harmonic pattern getting created leading to a corrective drop in the prices in short term. Fundamental still appeared weak for the yellow metal, which is having bleak demand outlook from its key consumer class.
Rural demand
"We may believe that monsoon has recovered but the adverse impact on agri sector is still visible. The rural demand for gold may remain a concern. On paper we may have overcome the deficit rainfall, but the ground situation is not supportive to trigger demand," Ajay Kedia, Director, Kedia Commodity told Businessline.
Gold trading range for the day is believed to be Rs 37,489-38,055.
In its research note, Angel Research noted, "We expect gold and silver prices to trade lower as appreciation in the U.S. Dollar and fading concerns over a possible recession dented the appeal for the safe-haven asset, Gold." However, lower price levels over the next few weeks is believed to trigger buying sentiment.
"The upcoming festivals, marriage season and Diwali will trigger emotional buying. So, despite current downside, we can't rule out gold at Rs 40,000 by Diwali. At the current level, market is consolidating. Hence, we may not see further immediate upside in short term," Kedia said.
Outlook for Silver
In its outlook for silver, Kedia estimates, trading range for the day between Rs 42,949-43,839 a kg. On MCX futures, Silver for September delivery fell in Tuesday opening trades at Rs 43,317, down by Rs 113 or over 0.2 per cent from its previous close.
CME Silver for September delivery traded lower at $ 16.88 an oz on Tuesday from its previous close of $ 16.94.
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