While gold had a tremendous run in the last few years, fuelled by turbulence in the global economy, prices are likely to moderate in the medium term with an improving economic environment, experts said.
Nilesh Gupta, Chairman, Administrative Committee, India Bullion & Jewellery Association (IBJA) felt that there was an overall bearish mood about gold “on the part of the trading fraternity given the developments over several months in India, although there is optimism that a new government would tackle issues like high duty and the 80:20 scheme”. On Monday, gold was trading at $1,300 levels and at Rs.28,700 per 10 gram levels on the MCX.
C. P. Krishnan, Wholetime Director, Geojit Commtrade, said an improving U.S. economy pointed to a further weakening of gold price.
Mr. Gupta, however, said that the Ukraine situation impacted the price of palladium and oil but gold “only in terms of sentiment”.
A stronger rupee would lead to further gold price reaction as it moved inversely to the stock market, crude and currency, Suresh Hundia, President-Emeritus, IBJA, said. “There is unlikely to be anything positive happening before October in India as the current marriage season has not elicited any pick-up”.
Kishore Narne, Associate Director & Head, Commodities & Currencies, Motilal Oswal Commodity Broker, said that in the current scenario, he was bearish on gold. “There can be a reaction in price by 15-20 per cent over the next 12 months,” he said.