New Dehi: Gold has fallen nearly by 11 per cent in two months. The metal has been sitting on the bull for the past three years with it beefing up by 68.24 per cent.
Three years back gold had been trading around $352.45 per oz (ounce) and now it is around $593.15 per oz.
Gold which has been seeing a technical correction has lost around six per cent in one month, but has been recovering its losses for the past three days.
Traders attributed gold's recent turnaround to oil climbing back above $70 a barrel, combined with dollar losing its strength against the euro.
Expectations of an interest rate hike by 50-basis point in the FOMC meet on June 28 have triggered the sell off in gold.
Gold and stock markets are behaving in quite a similar fashion. Both have been on a bull run since three years and now are trying to catch up with the bears.
But, commodities analysts are unanimous in their view when they say that $540 per oz is the support and the base level for this precious metal and touching which it can further go to $625/oz.
They feel this correction was needed just to bring sanity back to the market and that liquidity will come rushing and support the metal on its downside.
Gold movement had been in just one direction, northwards, since the time it was trading at $400 per oz, therefore it needed to see some healthy correction.
Market was getting overloaded with short-term speculative money coming and that is a reason why the precious metal market saw a spike.
Analysts like Arvind Desai, Prabhudas Lilladher, advice investors interested in the metal to enter at base levels of $540 per oz and to expect a rise of 15-20 per cent.
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In India there are various options of investing in gold. One can buy physical gold and keep it in a demat form, buy futures in domestic and international exchanges or participate in the gold rally by paying 7-8 per cent of the contract value.
Desai said,"Gold can see another 15-20 per cent rise in this coming week. If you enter at 540 levels then for the short term,(3-6 months) it can be a better investment."
His advise is to stay invested at current levels. "You can invest internationally and also through local exchanges. You can buy physical gold from banks or buy futures in domestic exchanges and international exchanges," he added.
Gold is seeing a technical correction and can go down by another five to six per cent.
"Lot of hot money had poured in. It had been rising for the last two years. The same thing is happening in the gold market as what is happening in the stock market. Foreign money seems to be leaving right now," said he.
According to him, gold and silver are the metals that have the best potential.
Sunil Kashyap, MD, ScotiaMocatta says that there is enough liquidity to support gold prices.
He also adds that gold fundamentals would remain bullish though it may see some correction.
Kashyap said, "There is enough liquidity right now and enough of story behind gold where people will continue to buy gold at dips. So we may see that price may come off a bit. But we will find liquidity rushing towards the market and supporting the downside."
ScotiaMocatta is looking at a range of $540-$550 for gold, "which seems to be a very strong support level and we should see it slowly trading it above $600-$625."
Suresh Nair of Kotak Securities says that in the local markets, one can go long on gold at around the Rs 8,200-8,300 levels for 10 grams.
He thinks that the overall trend remains bullish in India. He says that generally in the month of June, there is a sluggish physical demand in India, but by August, prices start picking up.
Nair, said, "In the local markets somewhere at Rs 8,200-8,300 levels for 10 grams, should be a good level to go long. Generally in the month of June, we have a sluggish physical demand.By August prices should start picking up."
So, keep a track when gold touches $540 per oz and try your luck!
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