Gold seen falling further from 1-wk low; silver to follow

Gold futures, which hit their lowest level in a week, are likely to extend losses following weak equity markets, while silver is likely to lose more than 2 percent following the yellow metal.

“Gold’s co-relation with equities is very strong now. And with Europe getting deeper into crisis, gold’s fall could be accelerated,” said Gnanasekar Thiagarajan, director with Commtrendz Research.

[caption id=“attachment_154497” align=“alignleft” width=“380” caption=“The weak buying trend is likely to continue in India. Reuters”]  [/caption]

The lack of confidence in Europe pushed investors into the relative safety of the US dollar, rather than gold, which has fallen by about 5 percent in the last week alone.

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The US currency and the yellow metal move in opposite direction as the two compete for funds.

The most-traded February gold contract on the Multi Commodity Exchange contract was 0.67 percent lower at Rs 28,911 per 10 grams at 4:56 pm, after hitting the lowest level since 6 December of Rs 28,836.

“Gold is not looking good and is headed to Rs 28,200/28,300 levels,” said Thiagarajan, adding sell MCX gold on rallies to Rs 28,850, with a stop loss of Rs 29,000, for a target of Rs 28,200.

The weak buying trend is likely to continue in India, the world’s biggest consumer of bullion, and likely to weigh on prices.

The most-active silver for March delivery on the MCX was 1.02 percent lower at Rs 56,353 per kg.

Silver may trade in the range of Rs 55,000-56,500, said Thiagarajan.