Gold falls below Rs 26,000
Chennai: Prices of gold and silver plunged on Monday on the back of stronger US dollar valuation and heavy selling from hedge funds.
Spooked by the commodity meltdown, gold hit a 21month low while silver prices plunged to a twoand-a-half-year level in the domestic bullion market.
While standard gold slumped by Rs 220 to finish at Rs 25,900 per 10 gram in Mumbai due to aggressive selling by stockists and investors, silver too hit a 27-month low and tanked by Rs 830 to end at Rs 42,970 per kg on heavy unwinding from traders amid subdued industrial demand.
Explaining the reasons for the plunge, Rajesh Mehta, chairman and managing director of Rajesh Exports, said, “Renewed strength in dollar index and overall fund liquidation led to today’s price drop.” Besides this, analysts claim that the fall in the demand is due to the offmarriage season and a further correction anticipated by retail customers.
“Coin and jewellery buyers do not seem to be stepping in as aggressively as they were last month when gold underwent its initial $200 an ounce swoon,” said Edward Meir, a metals analyst at futures brokerage INTL FCStone.
Traders confirmed a weak trend in futures trade as speculators offloaded their positions to shift their funds to rising equities, fuelling the downbeat sentiment further. Also, factors such as US Federal Reserve seen considering the benefits of a bond buying programme and heightened fears of early winding up of its economic stimulus programme, saw international gold prices slip in an eight-session slide.
Spot gold was bid lower at $1,352.55 an ounce in early European trade and spot silver at $21.39 an ounce. Analysts also peg a further fall in the prices of the yellow metal in the coming days before it settles down.
“Prices have next crucial support at $1320 an ounce, which might be seen providing a cushion to prices in the near term, but any breach of the same would ignite further selling pressure in the market and prices might drift towards levels close to $1,280-1270 an ounce,” said Sugandha Sachdeva of Religare Securities.
“Investors are very bearish at the moment,“ said Yuichi Ikemizu, branch manager for Standard Bank in Tokyo. “The stock market and the dollar are quite strong. It’s a natural move for investors to switch their money from commodities to equities.”
Yellow metal loses sheen for investors Strong dollar, aggres sive selling by stockists and investors and low demand from buyers pulled down gold price.Standard gold price in the city stood at Rs 26,800 per 10 grams.
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