Spot gold prices, excluding local taxes, are likely to witness a near 2-3% downward correction from current levels as easing worries over European economies is likely to outweigh the mixed cues from US in the next 3-4 weeks, analysts said.

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The yellow metal is likely to trade in a range of Rs 17,700-18,200 per 10 gm, while Comex gold is expected to follow $1,160-$1,210 an ounce range during rest of the month, industry watchers said in a nation-wide poll.

A sudden sharp fall in prices in the last couple of weeks —from Rs 18,200 per 10 gm to Rs 17,700 on MCX — has triggered a good physical demand in India, with most retailers pegging the demand growth at 30% over previous few months.

“Gold is expected to see correction again and local prices may test the Rs 17,700 (per 10 gm) support this month,” said Ashish Mundhra, director of Mundhra Bullion, a leading importer.

The metal is rising on physical buying support that emerged after a recent fall in prices, and the ongoing bounceback in international gold prices could be stretched to $1,210 an ounce, he added.

In local market, the bounceback will end at Rs 18,200-18,300 per 10 gm, most respondents said.

“Gold is headed for a bigger correction than a recent one, as European economic crisis is behind us and investors are moving from gold into more riskier assets like equities and currencies,” said Sumeet Bagadia, associate vice president-commodities & currencies, CD Equisearch.

“Spot gold overseas may extend gains to $1,202 and $1,210 an ounce, but it may again resume downtrend until $1,170 and then to $1,150 by the end of this month,” Bagadia said.

On domestic bourses, gold may even extend fall to Rs 17,400 per 10 gm if it breaches the Rs 17,700 mark, he added.  Prithviraj Kothari, director of

RiddiSiddhi Bullions was little optimistic on prices. “Global gold prices are unlikely to fall below $1,185 an ounce as US economic outlook remains grim, but positive outlook on rupee may bring (a) sharp fall in domestic prices to Rs 17,700,” he said.

NewsWire18