Gold price is likely to remain sideways this week due to uncertainty in global economy. The metal, of late, has started losing its status as safe haven investment avenue at the time of global economic crisis.
The metal remained range-bound during the past one week and closed at Rs 28,915 per 10g on Saturday in Mumbai's Zaveri Bazar, a marginal decline of 0.36 per cent.
In dollar terms, however, the decline remained slightly severe with the yellow metal closing at $1,711.60 an ounce on Friday. The metal witnessed a fall of two per cent during the week.
"There has been no clear indication from the euro zone which can provide the global economy a headway. Hence, the metal may remain sideways this week," said Naveen Mathur, associate director, Angel Broking.
Traders breathed a sigh of relief after 26 of the 27 European Union nations agreed on Friday to tighter fiscal unity, giving up some sovereignty.
Countries that don't meet deficit reduction targets or don't keep their budget deficits to three per cent of gross domestic product (GDP) are proposed to be penalised. But, the details of penalty is still being worked out.
Meanwhile, euro zone countries will contribute ¤150 billion to the International Monetary Fund (IMF) along with ¤50 billion from other European countries to increase the firepower of the IMF since European countries are not legally allowed to bail each other out. It might also prompt other countries
Gold has offered over 40 per cent return so far this year on strengthening the metal's appeal as safe haven investment avenue due to the global economic crisis. The euro zone debt problem has added the metal's lustre to remain on the top of investors' radar.
The yellow metal recorded 40.47 per cent gain this year in rupee terms to close on Saturday at Rs 28,915 per 10g, as compared to Rs 20,585 per 10g at the beginning of this year.
In dollar terms, however, the upsurge remained slightly lower.
The overall return in the yellow metal remained at 20.47 per cent to close on Friday at $1,711 an oz (London spot) on December 9 as compared to $1,420.78 an oz in the beginning of this calendar year.
Silver has also offered 19.60 per cent return in rupee terms. In dollar terms, however, the return remained thin as silver prices remained isolated in the entire precious metals basket moving in tandem with global industrial growth.
The move was justified as over two-third of silver availability is used for industrial consumption.
On Friday, gold for February delivery rose $3.40 to close at $1,726.30 an oz at the Comex division of the New York Mercantile Exchange on relatively light volume. The gold price has traded as high as $1,727.90 and as low as $1,704.90, while the spot gold price was up $8. Silver prices added 71 cents to settle at $32.25 an ounce.
The precious metals are currently overheated and need a pause, said an analyst.
