Gold may gain in medium term on bargain hunting

MUMBAI: Gold price is expected to rise about 4% in the medium term on the back of likely bargain buying with China and Euro zone keeping interest rates low for reviving economic activity, a market expert said.

"I expect that bargain hunting could take the price from current $1199 (about Rs 73,800) per ounce to around $1250 (approx. Rs 76,940) in the medium term, but if the rupee claws back from recent lows around 62 to the dollar, that could offset some of these gains," said Harish Galipelli, research head at JRG Wealth Management.

In the short term, he expects the yellow metal to consolidate at the current levels of around Rs 26,500 per 10 grams.

A weaker currency adds to gold's lure as it becomes costlier for countries that import the metal. However, in rupee terms a stronger local unit could offset potential gains in the overseas price.

On commodity bourse MCX, the active gold contract was trading at Rs 26,495 per 10 grams in early noon on Monday, around Rs 100 higher than Friday's close, even as the overseas rate struggled to convincingly pierce the psychological $1220 an ounce rate.