Gold futures for the near month delivery collapsed nearly 2% on the Multi Commodity Exchange today following heavy selling in China.
The yellow metal for delivery in October opened at Rs 25,212 per 10 gram and slipped marginally further to Rs 25,206, a decline of 1.99% from the previous close. For far month delivery in June 2016, however, gold was lower by 0.22% to trade at Rs 27,217 per 10 gram on Monday.
The sharp decline in gold price was reported after traders in Shanghai, China, sold nearly 5 tonne of the precious metal in early Monday trade, which dragged down gold to $1,088 an oz in early Asian trade.
In London, however, gold was trading at $1,106 an oz after recovering from its steepest fall of $1,088 an oz, a level last seen in February 5, 2010.
In Mumbai's Zaveri Bazaar, however, spot gold fell to Rs 25,235 per 10 gram in opening trade.
"Falling gold would certainly prompt retail consumers to book afresh for meeting their future demand," said Kumar Jain, Director, Umedmal Tilokichand Zaveri, a city-based bullion dealer and jewellery retailer.
Silver futures also declined. Silver for delivery in September 2015 was down 2.12% at Rs 33,472 a kg after opening at Rs 34,170 a kg. In London, silver hit multi-year lows to trade at $14.60, a decline of nearly 2% or $0.26 an oz.
Gold started falling after US Fed Chair Janet Yellen said early last week that a possible hike in interest rate could come by the year end on satisfactory growth in the US economy. Yellen's statement has rekindled traders' confidence in the US treasury. Consequently, the US dollar was trading at multi-year highs against the Eero at 1.08 on Friday.
Crude also opened low, with near month contracts declining upto 3% in opening trade. Crude oil for delivery in November opened at Rs 3,456 a barrel before recovering marginally to trade at Rs 3,420 a barrel.