Bullions plunge

Gold suffers biggest one-day decline since the 1980s

Bullion metal prices plunged on Monday, 15 April 2013. Prices of gold and silver prices careened lower on massive panic selling pressure on Monday that drove both market to more-than-two-year lows. Gold futures on Monday suffered their biggest one-day decline since the 1980s, as the metal extended its dive into a second straight session and pushed further into bear-market territory. The broader metals complex also dropped, with silver down 11% for its lowest settlement in more than two years after disappointing Chinese data fed worries over industrial metals demand.

Gold for June delivery ended lower by $140.3 (9.3%) at $1,361.1 an ounce on the Comex division of the New York Mercantile Exchange on Monday. It fell to a low of $1,355.4 during intra day trading. Prices had shed 4.7% last week.

May silver ended lower by $2.97 cents (11%) at $23.36 an ounce on Monday. Prices had lost 3.3% last week.

There has been no single fundamental catalyst for the panic selling in the gold and silver markets the past two trading sessions. Worries about demand for physical gold from China and India are getting some of the blame for the mass exodus of longs out of the gold and silver markets. Overnight, China reported its economy grew slower than expected during the first quarter, at 7.7% versus the expected rate of 8% annual growth.

There are also worries about troubled European Union countries selling their gold reserves to help finance their financial bailouts from the European Central Bank and the International Monetary Fund. Cyprus government officials last week said selling part of that financially imperiled country's gold reserves was on the table. Last week's Federal Reserve FOMC meeting that signaled Fed members are divided on when to end the Fed's quantitative easing of monetary policy also spooked the raw commodity market bulls.

Exchange traded funds (ETFs) for gold are also reportedly seeing very heavy outflows as investors cash out losing positions and are seeking other investment assets.

In the currency market, the dollar index, which weighs the strength of the dollar against a basket of six other currencies, remained steady on Monday.

At Wall Street, domestic economic news did little to paint an upbeat picture. The Empire Manufacturing Survey for April registered a reading of 3.1, which was down from the prior month's reading of 9.2. Market had expected that the survey would slip to 5.0.

Meanwhile, the April NAHB Housing Market Index registered a reading of 42, which was lower from the prior month's print of 44. Today's reading fell also short of the consensus which called for a reading of 45.

At the MCX, gold prices for June delivery closed lower by Rs 2,291 (8.2%) at Rs 25,634 per ten grams. Prices rose to a high of Rs 27,450 per 10 grams and fell to a low of Rs 25,450 per 10 grams during the day's trading.

At the MCX, silver prices for May delivery closed lower by Rs 4,523 (9.2%) at Rs 44,378/Kg. Prices opened at Rs 48,369/kg and fell to a low of Rs 43,522/Kg during the day's trading.

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