Gold prices crashed on Saturday recording its biggest ever fall of Rs1,250 per ten gram to hit one-year low on global cues.
Gold, which had been plummeting this week and traded below Rs30,000, fell further sharply by 1,250 to Rs28,350 per ten gram, a level last seen on April 7 last year following a steepest fall of 84 dollar to 1,477 dollar an ounce in global markets.
“Gold suffering such a biggest single day fall of Rs1,250 is never seen before and may lose more ground in coming days mostly influenced by speculative selling in futures markets,’ said All India Sarafa Bazar Vice president Surender Jain.
He said the market was mostly driven by global markets and futures trade, while there was hardly any physical buying.
“The main reason cited behind the crash in prices was gold sell off by central bank. Some 158,200 taels of gold bullion (roughly six tonnes) were sold in six auctions held by the State Bank of Vietnam. There were news that as soon as the international markets opened, Merryl lynch sold 4 million ounces of gold. Heavy ETF selling was also seen in the markets,” said RiddiSiddhi Bullions ltd Managing Director Prithviraj Kothari on the reasons behind gold price crash.
What triggered panic selling amongst investors was a statement by European Central Bank President Mario Draghi. During a press conference he said that while Cyprus doesn’t have to sell its gold, any money that is raised from the sale must go towards covering the losses from the emergency loans to country’s banks.
This resulted in panic selling. The important US data released on Friday gave an indication that US wholesale prices aren’t rising. Any such signal will prompt investors to sell old.
“ The next target for gold is 1450$ as gold is expected to decline further on the lines of a strengthening US economy,” opined Kothari.
Gold in New york, which normally sets price trend on the domestic front, tumbled to the lowest since July 2011 on signs that investors are favouring the dollar and equities as the global economy recovers.
Market experts said despite the ongoing Navratras festival, an auspicious week in hindu mythology for purchasing precious metals, retailers remained on sidelines on expectations of more correction in the prices.
Meanwhile, gold in futures trading dipped below Rs28,000 on the Multi Commodity Exchange of India on Saturday as speculators remained net sellers.
Silver also recorded a steep fall of Rs2,500 at Rs50,100 per kg on falling demand among industrial units and coin makers in the face of stockists selling driven by a hefty fall of 6.54 per cent to 25.85 dollar an ounce in New Uork.
On the domestic front, gold of 99.9 and 99.5 per cent purity suffered a whopping loss of Rs1,250 each at Rs28,350 and Rs28,150 per ten grams respectively. Sovereign followed suit and lost Rs300 at Rs24,800 per piece of eight gram.
In a similar fashion, silver ready nosedived by Rs2,500 to Rs50,100 per kg and weekly-based delivery by Rs2,745 to Rs48,780 per kg. Silver coins also dropped by Rs2,000 to Rs77,000 for buying and Rs78,000 for selling of 100 pieces.
