Ashok Mittal of Karvy Comtrade and Sunil Kashyap, managing director of Scotia Mocatta give their perspectives on how to trade in gold now and on where gold prices are headed.
Ashok Mittal expects the upward movement in gold to continue for some more time. He feels that this is the ideal time to invest in gold as people will make some good money in it. He does not expect the rupee to strengthen further hence there is not too much currency risk on the downside when the investment in gold is converted into rupee terms.
Sunil Kashyap expects gold to be rangebound for the rest of the year. He says that in the medium term, continued dollar weakness could bring some amount of strength for gold.
Excerpts from CNBC-TV18's exclusive interview with Ashok Mittal and Sunil Kashyap:
What have you been observing on the gold front and what kind of opportunities do you see in the local market to trade that commodity?
Mittal: I think like the equity market, gold, silver and crude oil are also going up. We have seen a good amount of rise in the last week in gold when it went up about USD 612 to about USD 637-638.
We expect this upward momentum to continue for some more time in gold and we are targeting international levels like $646 and $655 to come.
How would you translate that into a strategy in the local market?
Mittal: I think if somebody has to invest in gold, now he has to invest in the February contract, which is running approximately around 9380-9390 levels. So current levels or maybe some dips towards 9320 levels or so should be bought for a target of about 9460 and 9600.
The major reason behind this is that we do not expect the rupee to strengthen so much because RBI has been holding up the rupee from appreciating too much. So the currency risk is not much on the downside, when we convert the investment in gold into rupee terms.
Gold has weakened against Euro in the last one week by about 300 points or so and the data, which has come in US is not really supporting too much in terms of US economy being improved a little bit. So the outlook on US economy remains a little bit of a concern for most of the economists as well as their own Central Banks.
So I think, it is good to invest in gold, to buy and hold it for some period of time and wait for those levels to come. I think people will definitely be able to make some good money in this.
Gold has fallen from its 11-year high, what is your expectation now, where will it find its range?
Kashyap: It is still looking for some level of support. We have seen some move back and we are seeing some support this morning coming in from the fiscal markets. So we will be moving up slowly from here but it will basically be range bound, going forward for the rest of the year.
What is the expectation going forward from the dollar particularly considering the fact that there is always synergy in the kind of movement that both these commodities see, going forward?
Kashyap: The dollar has been obviously under attack for the last 5-6 sessions and there is continued dollar selling going on. Going forward, the dollar may recover somewhat as there is some technical pullback. But the medium term scenario will see continued dollar weakness and therefore some amount of strength for gold.For more information about trading and markets log on to www.moneycontrol.com