Gold prices are likely to decline further to around Rs 24,500 per 10 grams by December if the rupee continues to rule at the current level, according to analysts.
"We expect the gold prices to remain bearish and if the rupee continue to rule at current level the yellow metal may touch Rs 24,500 level by December. We expect gold to consolidate in a week or two, then continue to decline further from mid or end of December," Motilal Oswal Associate Vice President - Commodities – Kishore Narne told PTI.
MCX gold was at Rs 26,143 per 10 grams on Saturday while in the international market it was at $1,173.30 an ounce.
The major fundamental behind the bearishness of gold is the improving US economy, Narne said.
"The better than expected economic condition in the US is likely to lead to rise in interest rates, which will further strengthen the US dollar that will put more pressure on gold," he said.
In the international market gold is expected to rule at $1,080-1,120 level by the end of this year, he added.
Echoing the view, Commtrendz Research Director Gnanasekar Thiagarajan said the prices are expected to be around Rs 25,000-25,500 by December if the rupee continues at the current 61 level.
The further decline in prices may lead to production cuts, which is likely to be positive for gold and help in firming up of prices of the yellow metal, he said.
In the international market, gold is likely to be at $1,100-1,075 level by December.
"The bearishness is mostly due to strengthening of US dollar, which is leading to bullishness in the equity markets putting pressure on commodities across the board, including gold," he added.
Naveen Mathur, Associate Director, Commodities and Currencies, Angel Broking said expectation of interest rate hike by mid next year, improving US economy, bearish trend in crude price, stable geo-political issues and strengthening US dollar will put pressure on gold prices in the mid term.
"Gold is expected to be around Rs 25,500 level by December, after which it may begin to firm up on higher demand triggered by lower prices," he said.
In the global markets gold is expected to rule at $1,150-1,175 an ounce by December.
