Suresh Nair of Kotak Securities says that in the local markets, one can go long on gold at around the Rs 8,200-8,300 levels for 10 gms.
He thinks that the overall trend remains bullish in India. He says that generally in the month of June, there is a sluggish physical demand in India, but by August, prices start picking up.
He adds that silver prices will probably follow gold prices and one will probably have to wait and watch for silver.
Excerpts from CNBC-TV18's exclusive interview with Suresh Nair:
Put the domestic picture into perspective for us, how much must someone trading in gold have lost in this past month? What sort of losses do they trade in and how bad was the damage?
From the market perspective, there is a direct correlation between gold prices and the strengthening of the US dollar. The general market expectation was that there would be an aggressive interest rate hike in the US.
I am sure that the market participants are aware that we have the next FOMC meeting coming up on the 28th and 29th and the market participants feel that there will be an aggressive interest rate hike of 50 basis points. That triggered a sell off in gold and gold tested the lower side.
But I think the overall trend remains bullish in India. Generally in the month of June, we have a sluggish physical demand in India but I think by August prices should start picking up.
What kind of pain have traders seen in domestic
Leverage positions of course takes its own effect but in India, investors have the option of buying physical gold and keeping it in a demat form. They also have an option to participate in the gold rally by paying 7-8% of the contract value. So both these options are available with the investors and investors can choose.
In the long term, the trend remains bullish and if an investor wants to really allocate funds, he can buy physical gold and keep it in a demat account and probably look at a price level of more than Rs 10,000 for 10 gms in the next one and a half year.
Because of the lows of 7-8% kind of margins, did people over extend themselves while gold was going up continuously. Have a lot of traders been hurt very badly because of that?
Traders are affected but there are mechanisms available like stop loss orders, which traders can put in, of course they can sustain losses.
At what level should one go long on gold?
In the local markets somewhere at Rs 8,200-8,300 levels for 10 gms, should be a good level to go long.
What about silver?
Silver will probably follow gold, one will probably have to wait and watch for silver.
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