Indian gold prices are likely to touch a new high this week, but could witness a correction in the next couple of sessions, giving traders in the futures market a good buying opportunity.
The most-active gold for October delivery touched a record high of 31,091 rupees per 10 grams on the Multi Commodity Exchange (MCX) and was up 0.28 percent at 31,033 rupees by 1110 GMT.
"Gold and silver both could first correct lower in the initial part of the week. But, could resume higher after the correction towards the end of the week when some Federal Reserve members are expected to speak again on quantitative easing," said Gnanasekar Thiagarajan, director with Commtrendz Research.
The Federal Reserve has room to deliver additional monetary stimulus to boost the U.S. economy, Fed Chairman Ben Bernanke told a Congressional oversight panel in a letter, supporting sentiment in the gold market.
Buying could be done at 31,100 rupees, for a target of 31,600 rupees, with a stop loss below 30,830 rupees, said Aurobinda Prasad, head of research with Karvy Comtrade.
Weak demand from India, the world's biggest consumer, post record high prices and doubling of import duty could weigh on prices, limiting the upside.
Gold imports to India are likely to fall by as much as 26 percent, or by 200 to 250 tonnes, in 2012 as record high prices hit the budgets of consumers.
Silver is also expected to tread higher, following the yellow metal.
Silver for September delivery on the MCX was up 0.48 percent at 57,786 rupees per kg.
Buying could be done at 58,700 rupees in silver for a target of 61,100 rupees, said Prasad.