Falling euro may continue to drive gold prices up

Gold prices are likely to remain upbeat this week on bargain hunting by global investors, especially from Europe where market players seek refuge from falling euro against the US dollar. Analysts forecast gold to touch $1,665 an ounce in Europe, translating, thereby, between Rs 22,800-23,000 for each 10 g.

“At present, European investors are parking all their funds to gold due to a fall in their currency. Euro hit the lowest level at 1.2 against the dollar, raising concerns for investors. Though much would depend upon the dollar’s behaviour against euro, yet the yellow metal is upward bias,” said Gnanasekar Thiagarajan, director, Commtrendz Research.

Gold and silver prices were higher last week. Standard gold in the Indian currency rose 0.94 per cent or Rs 210 to close the week at Rs 22,445 for each 10 gm, while pure gold jumped 1.45 per cent or Rs 325 to close at Rs 22,665 for each 10 gm. Gold prices in London, however, recorded a rise of 1.28 per cent or $19.37 to close at $1536.4 an oz.

Similarly, silver gained 8.09 per cent or Rs 4,340 on the week to close at Rs 58,000 a kg. In dollar, too, the white metal gained 8.32 per cent or $2.92 to end at $38.01 an oz.

Gold for June delivery added $10.60 to $1,533.40 an ounce at the Comex division of the New York Mercantile Exchange yesterday. The metal has traded as high as $1,535.50 and as low as $1,518.40, while the spot gold price was up $14.50 in New York.

Generally, traders before a long holiday weekend tend to trade in the morning, put on “safe positions,” or buy assets they would feel comfortable leaving their money in for three days, and then, check out. Global traders booked gold ahead of long holiday weekend, as markets would remain closed on Monday for spring bank holiday.

Silver prices were rising 64 cents to $37.97 an ounce while the US dollar index was shedding 0.66 per cent to $75.08.

Meanwhile, the filling top post of International Monetary Fund (IMF) has been crucial for Greece’s bailout proposal. The continuation in euro zone concerns has strengthened claim for gold to hold high in coming days, amid speculation that IMF may halt the latest payment of Greece’s euro 110 billion bailout.

Naveen Mathur, associate director (commodities and currencies) of Angel Broking, said, “Gold’s future is running on tenterhooks due to uncertainty in the European economy. Greece’s problem may always come out with a solution, which is being evaluated by experts in the region for quite some time now. Hence, the problem is not new that can guide metal prices in one direction.”

Bhargav Vaidya, an analyst with B N Vaidya & Associates, however, contradicts this opinion. He feels gold prices will see a marginal correction to $1520 an oz in coming days.