Market woes likely to dent gold prices

Though gold bounced back in the international markets during the weekend, the sentiment remained bearish in India. Analysts, meanwhile, see another round of decline in the yellow metal prices next week on the back of global financial markets crisis.

The precious metal traded at a modestly higher level early on Friday in London, with a limited number of players booking fresh orders amid increased volatility and risk aversion in the broader financial markets. The metal jumped to $663 an ounce on Friday after falling to a one-week low of $659.50 the previous day.

However, in the domestic market, standard gold lost Rs 75 and settled at Rs 8,735 per 10 gm late on Friday from the previous day's close of Rs 8,810.

"If gold breaks the $658 level, the metal may hit the downward level of $646 next week," an analyst added.

Bhargav Vaidya of BN Vaidya & Associates pointed out that global price rise might not have an impact on the domestic price as the metal's price in London had gone up after Indian banks closed for the day.

With orders from domestic traders expected to begin soon for delivery in two months, the demand in the domestic market is likely to pick up in a few weeks.

Gold witnessed a 1.9 per cent fall in late Asian trade on Thursday, the largest fall since May 5, as some investors sold bullion for cash to cover losses related to the US sub-prime collapse. The price drop spurred some buying from jewellers, who account for almost 70 per cent of the gold consumption.