MCX Gold may scale to Rs 17000 this month

Yellow metal gave very good gains this month as it made a new high at MCX this month touching a level of Rs.16040/10gm. Spot gold also rose and touched its 11 month high of $1006.2 an ounce. Gold’s flickering performance in this month has outperformed the entire world asset classes. Gold can be considered as a hybrid investment vehicle. The spectacular rise in MCX prices has also been influenced by the depreciation of INR against the USD which breached the mark of Rs.51. Gold's value on the world's markets has increased to levels last seen in July 2008. Buyers in Russia have increased their demand for the precious metal due to the global financial crisis. Sberbank((Savings Bank of the Russian Federation) also noted a rise in the number of customers looking to purchase gold, according to Reuters reports. Jewellery consistently accounts for the largest share of the final demand for gold at around 75% of total demand. The economic downturn and uncertainty in the global markets, that has affected markets hugely, is unlikely to abate in the short term hence originating further safe haven buying. On the technical side, the metal stood firm for February, with prices touching record highs at MCX.The yellow metal broke out from a ten month consolidation pattern and the resultant up thrust lead to prices touching Rs16000/10gm levels. There is no such indication that the bulls are done away with, although market has so far failed to close above the psychological barrier of $1000/ounce at the COMEX. So we can expect some correction before that happens even up to significant support level at $880/oz and around Rs14700/10gm in MCX.However it does appear that incase of closing above $1000/oz, there is a likelihood of MCX Gold scaling all the way up to Rs17000/10gm levels this month.

Courtesy: Religare Commodities

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