The gold analyst community in India firmly believes that the fluctuation of Indian rupee against the US dollar would largely impact the precious metal prices in India. According to consensus outlook for the year 2014, international gold prices may continue to drop in 2014, though the extent of fall may not be as severe as it was in 2013. Incidentally, the precious metal is headed for a 30% drop in prices in 2013, hovering around $1,200 an ounce.
According to Societe Generale India, apart from rupee fluctuation, commodities that are not internationally traded, domestic production and consumption would also be the price determining factors.
ICICI views the sharp improvement in current account deficit this year from 4.9% of GDP in FY2013 to an estimated 2.9% as encouraging. However, in the short-term, it may be necessary to retain the curbs on gold imports till the recovery in exports sector is confirmed
Another financial services firm Geojit Comtrade suggests gold prices to hover around $1,200 in 2014 in the absence of any major buying coming from China and India. Technically, the yellow metal has supports at $1,180 and $1,150 levels. The overall trend remains bearish at least for the first half of 2014.
Anand Rathi- the commodity and currency research firm says another factor that would have a bearing on domestic gold prices is whether or not the government takes further measures to curb gold imports. If it does, the downside in MCX gold is likely to be limited.
Several brokerages such as Goldman Sachs and BNP Paribas too expect gold prices to drop below $1,050 in 2014.