According to some experts, gold is the strongest commodity out there right now and one should buy on any declines like the ones that have been occurring over the past few days. Many also say that this drop in prices is only temporary and gold will resume its uptrend soon enough.
27 Sep, 2011, 12.08PM IST
India Economic Times
NEW DELHI: The yellow metal rallied 1 percent on Tuesday, snapping four consecutive sessions of losses as a weaker dollar helped battered commodities stage a comeback.
The news pushed the dollar down 0.6 percent against a basket of currencies, making gold cheaper for holders of other currencies.
Spot gold gained 1 percent to $1,644.40 an ounce by 09:00 a.m., after sinking as much as 7 percent to a 7-1/2-month low near $1,530 in the widest daily swing on record on Monday.
"Probably gold is still the strongest commodity which one should buy on declines like the last couple of days we did buy gold at lower levels," said Ashwani Gujral of ashwanigujral. com.
"It seems crude and silver look a bit weaker. So on declines try to get into gold, but if the dollar starts rising again, you will see them crashing once more but the uptrend in gold is sustainable," added Ashwani.
"The correction in gold is in fact the first kind of severe decline which was seen in gold, but typically while we have had a pullback to the weekly averages, I think after some kind of slight upward swing, some consolidation gold might resume its uptrend," said Mitesh Thacker.
"If the international gold prices can capture levels of $1740-1750 an ounce, it will set the tone for another uptrend. On the silver side, the good trade is for the short term trade as you had a very severe fall from 64,000-65,000 odd levels in the MCX to down to an intra day low of about 46,000 odd levels," added Mitesh.
"As far as gold is concerned, the Rs 24,800 mark is where I would say an absolute bottom exists and for the near to medium term, I doubt the yellow metal will go below this level in the coming 3 to 4 maybe 5 weeks. On the upside, by the end of this calendar year, I have a target of between 27500 and 28000 on gold," said Vijay Bhambwani, Author, CEO, BSPLindia.com.
"We have seen extreme oversold levels on silver and now it is bouncing back. So for the next few days you might get a proper bounce back to levels of about 54,000-55,000 kind of replacing 50% of the decline, so that is a good trade in the short term," added Mitesh.
Dollar Outlook: Ashwani Gujral of ashwanigujral. Com
Well, 76 was the breakout level on the dollar index. So as long as we stay above 76, I do not think anything changes structurally. If we start breaking below 76-76.50, only then you would say that this dollar rally is over.
This is a temporary rally and finally it will end, but chances are that you will see higher levels before seeing lower levels. At least that is the evidence right now. So nothing really has changed. These are up and down swings which will keep happening as the dollar moves probably in a sideways manner above 76, but right now there are no signs of a permanent reversal.
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