OUTLOOK-India gold direction seen uncertain in choppy wk

Tag : gold recovery

By Ruchira Singh
MUMBAI, June 23 (Reuters) - India's gold futures are seen mixed ina week likely to be volatile as a U.S. interest rate review keepsthe dollar vulnerable and geopolitical tensions in the middle eastpumps up crude oil, analysts said.
"It is a very choppy scenario," said Debjyoti Chatterjee, associatevice president at MAPE ADMISI Commodity Research. "Onlygeopolitical tension is keeping gold firm... it doesn't have anyinherent strength."
Escalating tensions between Iran and Israel centred around theformer's nuclear programme stoked supply fears that was quick tofirm up gold, a hedge against high inflation.
But the possibility of a abatement of the situation cast a doubt ongold's rally, said another analyst at IL&FS InvestsmartCommodities Ltd.
"If the tension eases, gold might fall especially as there has beenpromise of more production of oil by Saudi Arabia," the IL&FSanalyst said.
But other analysts pointed out to the likelyhood of the U.S.keeping rates flat on Wednesday that could have an adverse bearingon the dollar and as a result, boost gold.
"It is evident that the U.S. economy is not showing any sort ofrecovery... this may rule out the possibility of any rate hike,"said Harish Galipelli, head of research at Karvy Comtrade Ltd.
Gold's level above $900 an ounce in foreign markets would keep itbullish, added Somnath Dey, incharge of metals and energy atReligare Commodities Ltd.