India gold seen down on fund crunch, strong dollar

By Ruchira Singh

MUMBAI (Reuters) - India's gold prices are expected to fall this week on signs of liquidation from investors, a stronger dollar and the end of India's buying season, analysts said.

"Gold is behaving like other asset classes... Diwali demand was lacklustre, people are liquidating exchange-traded funds and there is a possibility of lower rates in Europe that may pressure the metal," said Subodh Gupta, analyst at Anand Rathi Commodities.

Overseas gold traded close to a 13-month low struck last week, as a stronger dollar dented its appeal as an alternate investment and weak equity markets prompted a sell-off to meet margin calls.

A 7 percent fall in a big gold ETF overseas also kept the pressure on the yellow metal.

"All of the economic turmoil-driven price gain has been factored in," said Vamsi Krishna Kona, technical analyst at Karvy Comtrade Ltd.

"I do not see much of a rally from here. Maybe markets will consolidate."

Lack of money with the funds was another reason that could contract gold prices this week, said Pradeep Unni, senior research analyst at Richcomm Global Services DMCC.

Among the economic indicators this week, the most important would be the Federal Open Market Committee's two-day meeting in the U.S. on Tuesday that is expected to cut interest rates.