After hitting an all-time high in the Indian markets earlier this week, the price of gold declined sharply after US Federal Reserve chairman Ben Bernanke dampened expectations of a new economic stimulus for the American economy.
Gold prices in the US market fell sharply yesterday, while in Mumbai’s Zaveri Bazaar, gold and silver lost significantly today. Gold fell 1.3 per cent or Rs 398 to Rs 29,282 per 10g. Silver closed about two per cent lower or by Rs 1,090 to Rs 54,575 per kg. Gold is currently trading at $1,578.17 per ounce in the international markets.
Suki Cooper, analyst with Barclays Commodities, said, “Prices fell across the precious metals complex, surrendering much of the recent gains to the People’s Bank of China announcing a quarter of a per cent cut of both the benchmark lending and deposit rates, followed by Bernanke avoiding any direct signals of further quantitative easing. Prices also fell since the physical markets are fragile. Demand in India is still soft, while supply of scrap continues to gain momentum.”
Gold has seen huge swings, lately. Last week, weak jobs data from the US had caused a spike on hopes that the central bank would take measures to stimulate the economy. Gold was up Rs 900 per 10g in India. “Volatility still remains in the yellow metal. Currently, the movement of the dollar and the Indian rupee have a very important role to play in providing a direction to gold prices,” said Naveen Mathur, associate director of Angel Commodities.
Silver, which either follows the direction of base or precious metals, also saw a major sell-off due to the sharp fall in both gold and base metal prices. Silver holdings with iShares ETF fell 30.2 tonnes to 9,669 tonnes.
