Gold slid 1.7 per cent to $1,115.14 an ounce after tumbling as much as 4.2 per cent $1,086.18 an ounce. Silver also shed 0.27 per cent to $14.80 an ounce. Investors have soured on precious metals as the Federal Reserve gets closer to raising US rates for the first time since 2006.
Gold fell for the sixth day, losing as much as 4.2 per cent. Prices sank 2.5 per cent last week, the most since March. Meanwhile, China said at the end of last week that it boosted bullion assets to about 1,658 metric tonnes, less than expected.
On the domestic front too, gold suffered a big jolt and plunged sharply to touch a two-year low at the bullion hub here as panic-stricken investors and speculators went on a selling spree sparked by global liquidation worries. The yellow metal’s collapse in overseas markets predominantly triggered a fear among domestic investors forcing them to unwind their position heavily after a long weekend.
Standard gold (99.5 purity) sank by a whopping Rs 520 to finish at Rs 25,250 per 10 grams — a level not seen since June 28, 2013 as compared to last Friday’s closing level of Rs 25,770. Pure gold (99.9 purity) also tumbled by Rs 520 to end at Rs 25,400 per 10 grams from Rs 25,920 previously.
This is the biggest fall so far this year for the yellow metal. Tough measures taken by both the government and central bank to curb gold import amid slowing investment demand against the backdrop of a strong rally in equities, which is emerging as a preferred investment asset class, mainly took some sheen out of the metal.
Weaker domestic demand in the wake of slowdown in seasonal buying as well as higher domestic gold inventories also weighed on price movements, a bullion trader said. Silver, mirroring the overall bearishness, also took a steep plunge on the back of heavy stockists selling.
Silver (.999 fineness) slumped by Rs 340 to conclude at Rs 34,650 per kg as compared to Rs 34,990 last weekend. Gold has been under intense heavy selling pressure in recent weeks on strengthening dollar value and expectations that the Federal Reserve will raise interest rates for the first time in eight years on the back of steadily improving US macro-economic situation.
Heightened uncertainty in international commodity markets amid geopolitical developments in the aftermath of Greek debt deal and the historic nuclear agreement between Iran along with the world powers too weighed on trade.
Jewellery scrips have a party
Jewellery stocks were in limelight on Monday, surging as much as 14 per cent, as gold prices plummeted to over two-year low of Rs 25,700 per 10 grams. Shares of Gitanjali Gems surged 13.71 per cent, Shree Ganesh Jewellery House 11.79 per cent and Tribhovandas Bhimji Zaveri 9.37 per cent. Goenka Diamond & Jewels rose by 4.62 per cent, Rajesh Exports 3.95 per cent and PC Jeweller 3.17 per cent on BSE. “After continuing fall in gold prices, shares of gems and jewellery stocks rose sharply intra-day,” said Bonanza Portfolio Head Wealth Management & Financial Planning Achin Goel. Fall in gold prices may boost the revenue of these companies in view of heightened demand amid the forthcoming festive season.