MUMBAI Gold futures are likely to fall this week, reversing from their highest level in three weeks, weighed by a stronger dollar, which acts as an alternative to the yellow metal.
The actively traded gold for February delivery was 0.36 percent higher at 31,018 rupees per 10 grams at 1215 GMT, after hitting a high of 31,191 rupees last week, a level last seen on December 18.
"Uncertainty over Fed Quantitative Easing pausing by year-end and recovery in the US economy could be negative for gold," said Gnanasekar Thiagarajan, director with Commtrendz Research in Mumbai.
The euro, which fell after last week's Federal Reserve minutes, eased 0.3 percent to $1.3034, after falling to a three-week low of $1.2998 on trading platform EBS on Friday. Analysts said it could stay aroud these levels until a European Central Bank meeting on Thursday.
The dollar and gold move in opposite directions as the two compete for funds globally.
Selling is advised in gold at 31,020-31,050 rupees, for a target of 30,700/30,600 rupees, with a stop loss of 31,300 rupees, said Subhrasom De, an analyst with Karvy Comtrade in Hyderabad.
Recovering physical demand for the yellow metal due to speculation of an import duty hike could limit the downside.
India, the world's biggest buyer of the metal, charges 4 percent duty on gold imports, and the government has proposed to make imports of gold more expensive.
Silver for March was 0.35 percent higher at 58,188 rupees per kg.
Sell MCX silver on rallies to 58,900, with a stop-loss of 59,400, targeting 57,700, said Thiagarajan.
(Reporting by Siddesh Mayenkar; Editing by Sunil Nair)