Gold poised to gain sheen in India

NEW DELHI-INDIA  (Aug 22) Gold futures in Mumbai are poised to extend a rally from a two-year low to a record as an upward trend channel signals further gains, according to technical analysis by Kotak Commodities Services.

Futures on the Multi Commodity Exchange of India may climb above the all-time high of Rs32,464 ($514) per 10gm reached in November in the next one month, said Dharmesh Bhatia, a Mumbai-based deputy vice-president at the brokerage. "The price is currently in a strong uptrend forming higher tops and higher bottoms."

Spot bullion in London rebounded 16 per cent since reaching a 34-month low in June as demand for jewelry, bars and coins soared from India to China and Turkey. Prices in Mumbai have gained 24 per cent since declining to a two-year low of 24,830 on June 28 as the rupee slumped to a record. The contract for October-delivery fell 0.4 per cent to Rs30,705 yesterday.

Two-year low
"After creating a two-year low at Rs24,830, MCX gold has given a sharp pull back rally and closed last week above the upward sloping trend channel," said Bhatia. "There is a strong psychological support seen at Rs30,000. There will be some consolidation over the next two to three days and prices will zoom to new highs once it breaches the Rs31,500 level."

A rising channel is a continuation pattern where prices show bullish signals along a channel marked by two parallel lines.

The rising channel continues until the prices move to break through the upper or lower end of the channel accompanied by high volume. In technical analysis, investors and analysts study charts of trading patterns and prices to predict changes.

In China, gold consumption jumped 54 per cent to 706.36 metric tonnes in the first six months, the China Gold Association said this month. Per capita gold holdings in China are little more than 5gm.