Gold futures are likely to recover from their 13-week low this quarter and extend their rise further to breach 21,000 rupees by the end of the third quarter, analysts and importers said.

On Thrusday evening, gold for February delivery was trading 0.33 percent lower at 19,613 rupees per 10 grams, after hitting a low of 19,515 rupees, a level last seen in early November.

Prices have fallen a bit from their record high. Investors and traders would encash every opportunity and this would inturn help prices, said a bank official, which imports gold.

Prices are still down 6.3 percent from the record high of 20,924 rupees, struck on Dec. 7.

Analysts said there could be correction in the early part of the year and may recover at the end of the quarter on inflationary concerns, and a weaker dollar, which makes the alternative asset attractive.

In the short term, there is a fair chance of a corrective fall in prices, but we remain bullish towards the end of the first quarter of 2011, said Ritesh Gandhi, research analyst with AnandRathi Commodities, which expects prices to rise to 20,975 rupees by end of March quarter.

A median of the poll conducted by Reuters of 15 participants, which included 5 bullion importing banks and 10 brokers, was at 20,600 rupees.

EXTEND RISE TO RECORD

Gold could extend its rise to 20,775 rupees by the end of June and 21,600 rupees by the end of September, breaching the previous record of near 21,000 rupees seen last year on lower interest rate scenario and lingering concerns on growth in major economies.

Historically, low interest rates in much of the world have been a major support to gold prices in recent years. Low rates cut the opportunity cost of holding non-interest-bearing gold.

Seasonally, gold is the strongest during this period and from a long-term perspective, gold remains in a secular bull trend, said Amar Singh Deo, head of commodities research with Aditya Birla Money.

Further, increased investment appeal coupled with central banks also looking at diversifying into gold as foreign exchange (would help prices), said Deo.

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