Gold prices in India seen recovering after massive fall
MUMBAI (Reuters) - Gold futures in India, which hit the lowest level in more than 18 months on Tuesday, may stage a recovery as key technical indicators point to the yellow metal entering oversold territory, according to analysts.
Gold in India, the world's biggest buyer of the metal, has shed 21 percent from the record high of 32,464 rupees for 10 grams struck in November, spreading panic among investors and importers.
"Extremely overdone technical indications suggest a possible recovery in coming days," said Gnanasekar Thiagarajan, director, Commtrendz Research, adding that a recovery to 27,450/28,000 rupees is possible.
The Relative Strength Index (RSI) for MCX gold is placed below 20. Normally, when RSI goes below 30, it tends to get oversold and a possible upward correction is seen.
The most-active gold for June delivery on the Multi Commodity Exchange (MCX) was 67 rupees higher at 25,701 rupees per 10 grams, after falling to a low of 25,270 rupees, a level last seen in late September, 2011.
Buying is advised on dips to 25,300, with a stop loss of 25,100, targeting 26,000 rupees, said Thiagarajan.
Global gold hit an 11-month high in October last year after the U.S. Federal Reserve announced its third round of aggressive economic stimulus, raising fears the central bank's money-printing would stoke inflation.
But the gain was erased by a rally in equities, talks that the Fed could soon end its bullion-friendly bond buying programme, and concerns other indebted euro zone countries could follow Cyprus' plan to sell bullion reserves to raise cash.
Silver for June delivery was 0.48 percent lower at 44,166 rupees per kg.
Silver may trade in the range of 42,000-47,000, said Aurobinda Prasad, head of research, Karvy Comtrade.
(Reporting by Siddesh Mayenkar; Editing by Jijo Jacob)
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