India gold seen up on weak dlr, Asian demand

By Ruchira Singh

MUMBAI (Reuters) - Indian gold is expected to aim higher this week, riding the bullish momentum that saw it break the important $700 an ounce mark last week, analysts said.

The possibility of a U.S. interest rate cut and expectations of Asian demand were seen winning over lower crude prices and likely European Central Banks' sale in influencing gold, they added.

"The bull rally that people where waiting for, has possibly just begun," said Sahil Kapoor, research associate at Kotak Commodity Services Ltd.

"The key driver is expectations of demand in India... plus the dollar has been weak against major international currencies."

Chances of an interest rate cut by the Fed on Sept. 18 may continue to keep the pressure on the dollar, that generally has an inverse relationship with gold.

Last week's data showing big job cuts in the U.S. raised expectations of a cut in interest rates.

This week, analysts said, they would be eyeing several U.S. economic indicators such as consumer sentiment, jobless claims and industrial production for a reaffirmation.

But in its run-up, gold may see corrections, they added.