MUMBAI/HYDERABAD:Global gold prices plunged to a five-year low on Monday due to heavy selloffs in the Chinese market and anticipated hike in the US Fed interest rates.
Huge selloffs witnessed in the Chinese futures market and breaking the key technical support of $1130 has ignited liquidation pressure. Expectations of a raise in interest rates by the US Federal Reserve in coming months, easing tensions in Greece, upbeat global equities and weak demand from the top consumers — India and China — pushed prices into bearish territory.
Gold in Singapore, which normally determines price trend in Asia, lost 4.2 per cent to $1,086.18 an ounce — the lowest price since March, 2010. Similarly, silver fell 2.3 per cent to $14.54 an ounce — the lowest since December, 2014.
However, Monday saw a muted demand from jewellers and retailers at domestic spot markets, where gold prices fell to a near two-year low at Rs 25,700 per 10 grams.
On the other hand, jewellery stocks surged as much as 14 per cent even as gold prices nosedive. While shares of Gitanjali Gems surged 13.71 per cent, Shree Ganesh Jewellery House’s scrip soared 11.79 per cent followed by Tribhovandas Bhimji Zaveri at 9.37 per cent. Among others, Goenka Diamond & Jewels rose by 4.62 per cent, Rajesh Exports climbed 3.95 per cent and PC Jeweller was up 3.17 per cent on the Bombay Stock Exchange.
Tracking gold price movement, silver ready fell by Rs 150 to Rs 34,200 per kg and weekly-based delivery by Rs 600 to Rs 33,600 per kg. Silver coins nosedived by Rs 1,000 to Rs 49,000 for buying and Rs 50,000 for selling of 100 pieces in the domestic market.
According to analysts, gold price dropping below $1,100 an ounce was a huge psychological move easing its appeal as a safe haven and the outlook for gold may remain dim in the mid to long-term.
“Markets have commenced the week with an unexpected start following a spectacular drop in gold prices during the Asian session that sent the yellow metal to a new milestone five-year low at $1080 an ounce,” said Jameel Ahmad, analyst, ForexTime.
“A strong dollar and expectations that the US Fed will hike interest rates triggered selling pressure on gold and took prices to a lowest point since April, 2010,” said Hareesh V of Geofin Comtrade Ltd.
“Such a sharp drop in gold prices was a surprise and while reports that Chinese gold reserves were half the expected level might have inspired additional selling pressure, analysts said, it was the repeated comments of commitment from the US Federal Reserve on interest rates that put pressure on gold in recent months,” said Ahmad.
Looking ahead, as long as prices stay below the immediate support of $1140, market analysts, expect a dip towards $1080 initially, which if cleared convincingly would take prices as low as $1042/990 levels later. At the same time trend reversal point is seen at $1224.
Rs Down 19 paise at 63.66 against Dollar
Mumbai: The rupee closed 19 paise down at 63.66 against the US dollar on fresh demand for the Greenback from banks and importers. The rupee resumed lower at 63.53 as against last weekend’s level of 63.47 at the inter-bank foreign exchange market and dropped further to 63.67 before closing at a 3-week low of 63.66, a loss of 19 paise. It had last ended at 63.84 on June 29, 2015. The rupee moved in a range of 63.67—63.53 during the day.
Investors cautious, Sensex Sheds 43 pts
Mumbai: Retreating from a three-month high last week, the benchmark 30-share Bombay Stock Exchange Sensex ended the day 43 points lower at 28,420.12 as investors took a cautious line ahead of the monsoon session of Parliament beginning on Tuesday and a likely lacklustre earnings show. Some key Bills such as land acquisition and goods and services tax (GST) are expected to be presented in Parliament. Mixed Asian cues didn’t help.