Gold likely to drop on profit booking

Gold, which is currently ruling at a three-week high, is likely to cool down very soon as the current level of $666 an ounce has turned lucrative for stockists. Traders with long positions are looking for any price appreciation to offload their extra stock and, according to market sources, this is the appropriate time.

On Thursday, although crude oil hit a high of $76 a barrel and the US dollar depreciated to a low against all major currencies, speculators were cautiously looking at gold as an alternative investment avenue.

Last month, the yellow metal moved in a wide range of $676 and $640, offering a cautionary note to traders to go in for fresh bookings with huge funds. Generally traders, especially from the retail segment, prefer to abstain from any long position in a volatile market.

"The yellow metal is likely to slip in the domestic market to Rs 8,600 in the next 2-3 trading sessions as the bullish sentiment is limited to the strengthening currency and a substantial rise in oil prices. In London, however, gold may slip to $660 before the week ends," said Bhargav Vaidya of BN Vaidya & Associates.

Standard gold in the Mumbai spot market is quoted at Rs 8,719, excluding the 1 per cent value-added tax and 10 paise octroi.

Meanwhile, tomorrow being Friday 13, there is negative sentiment on the traders' minds, which (Friday 13) they generally observe as a black Friday.

Besides,, Friday being the weekend overseas, hedgers and speculators do not book fresh positions in huge quantity. Considering all these, gold might see a downward trend, an analyst said.

In contrast, Prithviraj Kothari, director of Riddhi Siddhi Bullion, still believes gold may go up to $670 before taking any downward move.

Witnessing the sixth consecutive gains, standard gold closed in Mumbai with a Rs 20 gain at Rs 8,740 per 10 grams, while the pure gold eased by Rs 15 to settle at Rs 8,785 per 10 grams. Similarly, the yellow metal gained Rs 5 in Delhi to close the day at Rs 8,830 per 10 grams.