Gold falls further on profit-taking

India gold futures fell further in early trades Wednesday on continued profit-taking and a firm rupee,analysts said.

Gold futures had witnessed their new all-time high of 16,040 rupees per 10 grams on Friday as growing concerns over the global economy redoubled investors fervour for the safe-haven asset.

Analysts expect bouts of profit-taking but concur that the overall intermediate trend is still up.

The yellow metal fell 2.5 per cent in the previous session.0

“It is healthy profit-taking in a bull run,” said Amar Singh,head of commodities research with Angel Commodities in Mumbai.

“But buyers would be cautious to enter the market after yesterday’s fall,” Singh added.

The Indian rupee edged higher on Wednesday as gains in domestic shares eased concerns about outflows,but the dollar’s strength overseas and demand from importers prevented a sharper rise.

A firm rupee makes the dollar-denominated gold cheaper.

Story continues below this ad

“The correlation of gold with stock markets is clear,” said Gnanasekar Thiagarajan,director with Comtrendz Risk Management in Mumbai.

“If stocks continue to go up,gold may see some correction to 15,200 rupees,” Thiagrajan added.

Debjyoti Chatterjee,associate vice-president with MAPE ADMISI Research,expects the benchmark contract to correct from current levels and trade in the range of 15,490-15,300 rupees.

The April contract was 0.70 per cent lower at 15,376 rupees per 10 grams at 11:30 a.m..

Story continues below this ad

Open interest for April gold on MCX was at 18,117 lots,up from 18,084 a day earlier. Volume on Tuesday was 76.21 kg.