Gold dips over 2% on profit booking

Gold eased 2.15 per cent in Mumbai on Tuesday on weak guidance from global markets where investors resorted to profit booking on waning interest in exchange traded funds (ETFs) thereby, increasing the risk as save heaven investment.

Standard gold nosedived by Rs 330 to close at Rs 15,335 per 10 gm while pure metal plunged Rs 325 to settle at Rs 15,400 per 10 gm.

The world’s largest gold-backed ETF, the SPDR Gold Trust, reported its holdings at 1,029.29 tonnes on Monday, steady from last Thursday and up only 5 tonnes in nearly a fortnight. This indicates that investors are moving either towards physical gold or other asset classes including equities.

The yellow metal, however, continues to remain investors’ preferable pick as an asset class in the current economic downturn as the long term outlook still remains bullish, said Navin Mathur, head — commodities, Angel Broking. In short term, gold may see the level of $880 an ounce in London translating into Rs 14,500 per 10 gm in Mumbai, he added.

Experts believe that the metal was supported by a firmer tone to equities in European markets after initial decline that eased selling of the metal to cover losses on other markets. Spot gold was trading at $925.45 an ounce in early Tuesday trade in London, a rangebound from $925.35 late in New York on Monday. Earlier in the day, the metal touched a near three-week low of $919.90 an ounce.

The yellow metal slipped 1.5 per cent on Monday as global stock markets plummeted, with Wall Street falling to 12-year lows, forcing some investors to sell the precious metal to meet margin calls. In Delhi, the precious metal fell by Rs 430 to Rs 15,200 per 10 gram after tumbling to its lowest in almost three weeks. Silver too followed suit and recorded a decline of Rs 680 at Rs 21,420 per kg.

Silver coins declined by Rs 200 to Rs 28,300 for buying and Rs 28,400 for selling of 100 pieces.

Although, rupee recovered a bit in early afternoon trade, the currency slumped to the level of 51.97 against dollar on weakening economy. Gold is becoming costlier in India because of the rupee fall but a recovery in rupee makes the precious metal cheaper, said the analyst.

On the MCX, the benchmark gold contract for delivery in April slipped 2.59 percent at Rs 15,397 per 10 grams, after hitting a low of 15,305 earlier.

Open interest for April gold on MCX was at 19,207 lots, down from 17,636 a day earlier. Volume on Monday was 75.45 kg.