'Indian gold prices may fall in June'

Gold prices in India are likely to fall in June-end following the expected recovery of world markets in the middle of the year, said a Reuters poll.

The survey said the third and fourth quarters of 2009 may witness hardening of gold prices as inflationary expectations build up due to a slew of government spending measures.

The Reuters poll of 15 banks and brokerages showed that gold may fall to Rs 13,995 per 10 gm by June-end, Rs 15,000 by September-end and Rs 15,830 by December-end.

According to the survey, Karvy Comtrade said the recent economic measures are likely to support the economy from moving deep in to recession thereby taking off the sheen from gold.

A world-wide credit crunch in mid-September has plunged key economies across the globe into deep recession, prompting central banks to execute co-ordinated rate cuts and governments to step up spending to stimulate demand and boost output and jobs.

Gold prices are down about 10 per cent from their all-time high of Rs 16,040 per 10 grams on February 20.

Recent spending initiatives by governments such as the $787 million stimulus package in US and the two-year 4 trillion yuan plan by China may fuel inflation expectations, spurring demand for gold, which is used by investors are a hedge against rising prices, the survey said.

Analysts said for a medium term perspective, investors are recommended to buy gold at the value area.

The prevailing correction will continue and the area of Rs 13,500-13,700 can be denoted as “value area” as it is stuffed with two distinct technical supports.