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| Gold rally takes a breather |
| BS Reporter / Mumbai Dec 06, 2009, 00:32 IST |
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The price of the yellow metal crashes Rs 500 on Saturday, adding to the 3.34% fall in last 2 days.
Bullion prices have firmly snapped their one-month bull run now. Profit-booking, triggered by the strengthening dollar, pulled down gold prices from their record highs.
In the last two days, domestic prices of the yellow metal have come down by Rs 620, or 3.34 per cent, with a fall of Rs 500 coming today. Internationally, gold has slipped 5.6 per cent in two days. It touched $1,226.44 an ounce on Thursday, while in Asian trade today morning, it fell to $1,161.43.
Ajay Kedia, director, Kedia Commodities, said, “Traders preferred to book profit ahead of the US holidays and, hence, there was low rollover and a fall in open interest in gold futures on the Comex Division of the New York Mercantile Exchange. A similar trend was observed on the Multi-Commodity Exchange (MCX), where the rollover in gold futures was lower than in the previous cycle.”
In the last 7 trading days, MCX’s open interest have come down by 33 per cent.
Kedia, however, feels the fall could be a correction after the recent bull run. In the last few months, gold has been rising consistently. In the last one month, gold went up from $1,059 on November 2 to $1,226 on Thursday.
Christmas holidays in the US start in the third week of December and traders avoided keeping open position as the Dollar index was trading at lower levels, indicating the currency may strengthen in the short term, making gold less attractive.
US employers reduced 11,000 jobs in November, which is the lowest job cut after recession set in last year. This has caused speculation that the US Fed may raise interest rates. Any rise in interest rates is expected to strengthen dollar on rising inflows. Generally, dollar and gold prices moves inversely. The Dollar index rose to 75.91 on Friday from 74.63 a day earlier.
Standard gold prices hardened to its all-time high of Rs 18,255 per 10 gm on Thursday on persistent buying by stockists in view of the rising trend in the global market. However, prices fell by Rs 500 per 10 gm to Rs 17,600 today.
This is the first major correction in prices since the Reserve Bank of India announced buying 200 tonnes of gold from the International Monetary Fund (IMF) a month ago.
Silver also shot up to Rs 30,270 a kg on renewed industrial demand coupled with rising global prices. Today it closed at Rs 29,445, down Rs 825 from its peak during the week.
Gold futures shot up to $1,226.40 an ounce on the Comex Division of the New York Mercantile Exchange following weakness in the dollar, which fell to a 16-month low. Gold closed at $1,161.42 on Saturday.
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