Gold faces US Fed heat, sheds Rs 200 per 10 grams; tepid demand hurts

Gold prices plunged as much as Rs 200 to Rs 28,250 per 10 grams today, in step with a weak global trend after the US Fed's decision to raise interest rates, compounded further by depleting demand due to the prevailing cash crunch.

Silver too cracked below the Rs 41,000-mark by falling Rs 450 to Rs 40,950 per kg on poor offtake by industrial units and coin makers.

The overseas weakness saw gold slump to a nearly 10-month low after the Federal Reserve hiked interest rates by a quarter percentage point, which boosted the dollar and took the shine off the precious metals.

Globally, gold fell 0.39 per cent to USD 1,138.10 an ounce and silver by 1.04 per cent to USD 16.63 an ounce in Singapore.

Besides, a sharp drop in demand from jewellers and retailers at the domestic spot market in view of the existing cash shortage in the financial system following the demonetisation move hit sentiment, they said.

On November 8, the government had announced its decision to demonetise Rs 500 and 1,000 rupee notes in a bid to flush out black money, leading to the cash drought.

In the national capital, 99.9 per cent and 99.5 per cent purity gold plunged by Rs 200 each to Rs 28,250 and Rs 28,100 per 10 grams, respectively.

Sovereign followed suit and traded lower by Rs 200 to Rs 24,000 per piece of eight grams.

Following gold, silver ready dropped by Rs 450 to Rs 40,950 per kg and weekly-based delivery by Rs 505 to Rs 40,975 per kg.

Silver coins, however, remained unchanged at Rs 72,000 for buying and Rs 73,000 for selling of 100 pieces.