World gold price sinks for 10th day; domestic rate dips to 4-year low
24 July 2015 4:19 AM IST
Meanwhile, prices reached a five-year low of $1,080 an ounce on Monday and holdings in exchange-traded products are at the lowest since 2009. Bullion has fallen out of favor with investors as the US Federal Reserve prepares to raise interest rates, boosting the dollar and hurting gold?s allure. Prices could fall below $1,000 for the first time since 2009, Jeffrey Currie, Goldman?s New York-based head of commodities <g data-gr-id="34">research,</g> said.
Meanwhile, reeling under tremendous selling pressure for the third straight day, Indian gold prices nosedived to touch a four-year low and closed below the key significant Rs 25,000 milestone at the bullion hub here. The plunge, mainly attributed to global spill-over effects after the scary fall in <g data-gr-id="36">value</g> of the shiny metal worldwide trade where the broad-based commodities bore the brunt of investors’ panic selling recently amid a <g data-gr-id="30">flash-crash</g>.
Though the <g data-gr-id="27">yellow-metal</g> has taken a beating spooked by a massive global commodity meltdown, breaking down below the 25,000 support level predominantly triggered panic unwinding from bullion funds as well as speculative traders. Standard gold (99.5 purity) slumped by Rs 300 to finish at Rs 24,820 per 10 gm from Tuesday’s closing level of Rs 25,120.
Pure gold (99.9 purity) also tumbled by a similar margin to end at Rs 24,970 per 10 grams compared to Rs 25,270. After outperforming the equity markets for more than a decade, finally gold has lost its glimmer — in India as well as the global markets, a bullion trader commented.
But a revival in <g data-gr-id="29">monsoon</g> in the country coupled with the festive and marriage season demand may revive the market sentiment, he added. Yellow-metal shot to a lifetime high of Rs 33,790 per 10 grams in <g data-gr-id="28">August,</g> 2013.
Elsewhere, moving with the general trend, silver also fell back after a brief overnight recovery on subdued industrial demand. Silver (.999 fineness) moved down by Rs 90 to settle at Rs 34,635 per kg against Rs 34,725 on Tuesday.
P-note investments slide to $43 billion at end of June
Investments through participatory notes (P-Notes) into India’s capital market dropped to Rs 2.75 lakh crore ($43 billion) at the end of June, after touching over seven years high in the preceding month. P-Notes, mostly used by overseas HNIs (High Net Worth Individuals), hedge <g data-gr-id="67">funds</g> and other foreign institutions, allow such investors to invest in Indian markets through registered Foreign Institutional Investors (FIIs). This saves time and cost for them, but the flip side is the route can also be used for round-tripping of black money. According to Sebi data, <g data-gr-id="62">total</g> value of <g data-gr-id="63">P-Note</g> investment in Indian markets (equity, <g data-gr-id="64">debt</g> and derivatives) declined to Rs 2.75 lakh crore at June-end, from Rs 2.85 lakh crore at the end of May.
May’s figure marked the highest investment since February <g data-gr-id="61">2008,</g> when the cumulative value of such investments stood at Rs 3.23 lakh crore. The total outstanding value of P-Notes has been rising steadily since January this year and the momentum continued till March, with April registering a drop but May hitting the highest level in over seven years and again it slipped last month. Besides, the quantum (percentage) of FII investments through P-Notes decreased to 11.5 <g data-gr-id="58">per cent</g> last month from 11.8 <g data-gr-id="59">per cent</g> in May.
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