Bearish on gold for 2013: Kishore Narne

Yesterday the government hiked the import duty on gold and platinum to 6 percent from 4 percent. It was a move aimed at curbing imports of the precious metals.

Kishore Narne, Motilal Oswal Commodity Brokers remains bearish on gold for 2013 and sees a downside of around 10-15%. In an interview to CNBC-TV18 he said the import duty hike by the government would not impact demand of gold in India. No affect of duty hike; see inventory gains: PC Jeweller In dollar terms, for the short-term he expects gold to rise to USD 1710-1715 per ounce and then expects it to fall to levels of around USD 1530 per ounce. Whereas in rupee terms, he expects gold to trade around Rs 28,000 per 10 gm for first half of 2013. Below is the edited transcript of his interview on CNBC-TV18 Q: How might gold behave because of this proposal from the government? What is your sense, first the short-term and for an investor in MCX or NCDEX? A: Gold imports or gold demand in India will not be impacted by the duty increase. So it is a one time knee-jerk reaction which we saw yesterday evening and today as well. It doesn’t change the decisions of the consumers as well as the investors. Overall, my sense is that gold might have ended its up cycle although I don’t believe in cycles in gold especially because it doesn’t have any proven track record of cycles. Every time gold rally happens or a fall happens, it is driven by other factors like interest rates, quantitative easing, monetisation of assets across the world. Right now the only trigger according to me is the fresh easing from Bank of Japan which we saw today morning, which would start in early 2014. For 2013, I still remain bearish on gold although not extensively, probably 10-15 percent downside. My view on currency is that we would be appreciating throughout 2013. Taking that view into consideration, with another 10 percent incremental appreciation of currency probably might see 15-20 percent decline in gold prices in India over 2013. Q: What kind of levels if you are looking at a bearish view on gold give us a dollar view as well as a rupee view? A: Dollar view is slightly on the higher side. Probably in the short-term we might be going towards USD 1710-1715 kind of levels and then we will be falling towards USD 1530. Gradually, as the overall macro economy across the world improves, and the growth factor comes back, probably the additional incremental flows into gold will slowdown as other asset classes’ start performing better. In rupee terms we will be looking at initially Rs 28000 per 10 gm for gold in India, may be in first half of 2013. From then onwards probably Rs 24000-26000 per 10 gm could not be ruled out but that is an extremely aggressive view.  However, from whatever visibility we have at this point of time, Rs 28000 per 10 gm is possible.