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Analysts mixed on international gold price outlook

While Citi analysts predict that gold prices rally may not last, HSBC is bullish on the yellow metal.

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A report by analysts from Citi predict that the upsurge in gold prices seen in the first quarter is unlikely to sustain, a Business Insider report says. Which means, prices of the yellow metal may fall soon.

The first quarter of 2016 saw major volatility in equity markets around the world, aided by growing concerns over the health of the global economy, the state of the Chinese economy and its effects on the rest of the world. Even the Indian equity markets shed their market value in the first three months of the year, on contagion effect. Uncertainty about global growth also ensured that currencies were in for a turmoil. This included the dollar, yen, euro and all the emerging market monies which were all at multiple-year lows.

During this time, gold prices around the world surged. Gold is considered a safe haven and a hedge against inflation at the time of economic uncertainty. 

Gold prices on the international bourses were at $1,230.90 on last count. Prices have surged 12.1% since the beginning of the year. 

In the domestic market, gold prices were at Rs 29,370 per 10 grams.

The Citi report said, ""As risk calms down, equity markets perform well and long end yields in the US and Germany .... rise, that is not a recipe that favours gold."

"We are increasingly of the view that the recent rally on Gold is both owned and unsustainable," it said.

However, another report from HSBC's analysts indicated that the firm was bullish on the precious metal.

"With momentum turning up, we open a long position at a spot reference of $1,260. A stop-loss is set at $1,200 with an initial target of $1,500."

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