Selling pressure pushes gold prices down in India

Gold prices in India have been sliding all week, falling below the crucial $531.66 per 10 grams level for the first time in six weeks in New Delhi on Friday.

It has been downhill all the way. The price of gold has been trading lower in all the major metros in India for five consecutive days. Standard gold with 99.5 purity fell below the all-crucial $531.66 per 10 grams level for the first time in six weeks in New Delhi on Friday, after slip-sliding all through the week.

The precious metal lost $7.12 per 10 grams on sustained selling from the domestic market. Traders said gold prices declined to levels last seen on November 3, given the gloom scenario in the global markets. Most jewellers have also been reporting reduced demand from consumers at the prevailing prices.

In the Ahmedabad bullion market, standard gold slipped by $26.27, while in Chennai in the South, standard gold was down by $8.16. In Mumbai, traders said gold was down $3.42 and retailing at $547.33 in the early hours of December 16. However, later in the day, gold slipped past the all crucial mark in Mumbai.

In the global markets, the scenario was not any different. The price in the global markets normally sets the price trend on the domestic front and gold fell by $5.90 to $1,570.60 an ounce in New York last night.

The stock market too has taken a tumble in India. The markets witnessed a dire situation on Friday with the Nifty (National Stock Exchange index) closing below the psychological 4700 mark for the first time since November 3, 2009, and the Sensex (Bombay Stock Exchange) shedding 345.12 points. There was a sharp sell off in index heavyweights.

“Gold has traditionally been a safe haven asset, but in recent days it has come under pressure from technical selling. Many investors in India are looking to liquidate their gold holdings to make up for their losses in equities. The markets have crashed but gold is still more precious, despite having fallen sharply all this week,” said Sonamull Shah, bullion trader who regularly buys at the Multi Commodity Exchange (MCX) in Mumbai. At the MCX, the Goldpetal December contract was trading down 0.07% at $52.17.

Research firm Angel Commodities said in a note to their clients, “In the Indian markets, we expect precious metals to come under pressure on account of a stronger Rupee. In the very near term, we expect spot gold prices to test levels around $1530/oz”.

Bullion analyst Rajesh Patnaik added that gold prices had closed in negative territory on Thursday. “Although market sentiments revived, investors are cautious about the future global economic prospects. Fresh buying is not coming in as a major supportive factor as markets are expecting a further falls in prices.”

He added that investors are now referring to the yellow metal as being connected to riskier assets, and are not relying on it as a safe haven asset. “Gold prices have increased sharply. When the yellow metal touched its peak of $1920/oz, investors began to book profits in this asset class in order to cover up losses in other segments. Several other factors are now adding pressure on prices,” he added.

Retail jeweller Madanlal Jain said, “With such high rates, it is not possible for families to go in for new gold or new pieces of jewellery”. What most investors do at a time like this is they recycle old gold jewellery when buying for any auspicious occasion. Jain added: “There has been a 50% rise in recycled gold in recent months.” – Mineweb

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Posted by admin on Dec 17 2011. Filed under Gold predictions. You can follow any responses to this entry through the RSS 2.0. You can leave a response or trackback to this entry