Last week, gold saw a rebound due to buying seen at lower levels, traders and analysts say that technical buying was witnessed majorly last week despite the dollar being strong.
"Gold was on a rebound last week, purely for technical reasons, there was no other major reason for gold to move up as the dollar also strengthened, but this won't continue in the coming week. The movement of gold on the Indian market will totally depend on which factor over powers the other,” said Jayant Manglik, president of retail and distribution at Religare Securities.
Gold prices moved up by 1.5 per cent to Rs 26,524 per 10 grams on the Mumbai spot market, while on Multi Commodity Exchange it moved up to Rs 26,406 per 10 grams, up by 2.2 per cent. On the domestic market gold prices got a major push due to depreciation in the Indian rupee.
Gold witnessed a drastic fall on May 18 to Rs 25,835 per 10 grams while on the Mumbai spot market it reached a low of Rs 25,900 per 10 grams, but in the very next trading session the yellow metal saw a sharp rebound due to value buying from traders as they were taking advantage of the low price of the commodity.
On international markets, gold moved up by 2 per cent to $1,386.65 per ounce. Over the past few weeks, continued relative strength in the US economy boosted the sentiment for a dollar bull market.
Gold on the domestic market will remain stable as the rupee is expected to depreciate next week against the US dollar.
" There is no important data expected next week which will have an impact on gold prices, the only reason is the strengthening in the US dollar which will weigh down on the yellow metal globally,” said Naveen Mathur, associate director of commodities and currencies at Angel Broking, a Mumbai based broking firm.
The over all outlook for gold still remains bearish as liquidation of gold Exchange Traded Funds continue which will weigh on prices. Brokerages continue to maintain a bearish outlook for gold in the short to medium term.