Gold likely to dip to Rs 20,500 in FY16

Mumbai: India Ratings and Research on Friday maintained a negative outlook on domestic gold prices for FY 2015-16 and said rates are likely to decline to touch Rs 20,500 per 10 grams in India from the current levels if the US Federal Reserve effects a rate hike.

“The agency believes movements in gold prices will largely depend on the US interest rate decision. In the event of a US rate hike, global gold prices could drop and range between $900 an ounce to $1,050 an ounce. As such, the domestic price of gold may decline and range between Rs20,500-Rs 24,000 per 10 grams from the current levels of Rs 27,000,” IndRa said. It also expects a higher rate hike to cause gold price to fall by 10-25 per cent.

However, it said, if the US continues to delay the rate hike, while major economies such as Japan and the eurozone continue with their UMP, the price could creep up and range from $1,300-1,350 an ounce in FY16.