Gold price to soften once Re strengthens: Anand Rathi Comm

As the rupee strengthens against the US dollar gold prices are expected to soften, he said in an interview to CNBC-TV18.

Monetary easing by both European central bank and the Federal Reserve will impact gold prices. "If ECB eases first it will not be a major impact on gold, but if the Fed eases then there will be significant impact on gold prices and will be pushed up because of liquidity," he explained.

He sees global gold prices hovering in the range of  USD 1600-1620-1650 per ounce levels ahead.

Meanwhile, he sees Brent crude slipping from the current levels to USD 92-93 per barrel on the downside and WTI hitting USD 80-81 per barrel. "Another couple of dollars upside should be a good sell from the current levels also," he added.

Below is the edited transcript of Narne's interview with CNBC-TV18. Also watch the accompanying video.

Q: The Indian prices of gold has hit the above Rs 30,000 mark what is the expectation according to you, do you think there is more room for upside from here?

A: We are more or less playing the rupee play rather than gold as far as the last 3-4 months are concerned. Primarily, Indian gold prices have been benefited from the weakness of rupee. So now as the rupee tries to put up strength against the dollar we will see some kind of softening of gold prices.
Again at the same time global prices have to be somewhere close to USD 1600-1620-1650 per ounce levels.

But global uncertainty is something which is preventing analysts to take a broader call on most of these commodities because there is lack of clarity on how the Greece elections are going to go and whether the ECB will first start the easing or Fed will first start the easing process.

Easing is given, but there is quite a bit of difference between easing of Fed and ECB. If ECB eases first it will not be a major impact on gold, but if the Fed eases then there will be significant impact on gold prices and which will be pushed up because of liquidity

Q: It is stand-off in trade for a positional trader, for an investor, would you want to wait before certain targets are hit on at least events happen?

A: For Indian investors especially, if you are holding physical gold or ETFs or longer term gold instruments probably this is the time when you are already hitting an all time high. Given from here a year outlook probably rupee is going to appreciate significantly from current levels. So, it will take off a lot of gains from the Indian markets.

So what we are suggesting is to go and hedge their long-term exposures on to futures exchanges or where you can at least get some kind of kind of rollover premiums around 6-7% per annum, which also will be protective from the downside that is what we are advising long-term clients.

But for the short-term clients certainly we are on the sell side for a day or two. But again the current rally for the last 48 hours is typically driven by hope rather than any fundamental factors. As the hope fizzles out the rally will be easing out.

Q: How will you play crude an intraweek strategy, a positional strategy?

A: Crude WTI should pick up another couple of dollars maybe USD 87 is what we are looking at. From there we should be going on for a sell mode. You will be averaging Brent crude around USD 100-105 per barrel in the next two-three months. On the downside, one may hit a USD 92-93 per barrel mark on Brent at the same time USD 80-81 on WTI. So, another couple of dollars upside should be a good sell from the current levels also.