Gold prices are expected to tumble to $850 (Dh3,122) an ounce and then to $820 before finding support at sub-$800 levels in delayed successions, commodities analysts said. The drop in prices will come as resilient equity markets and ameliorating prices of other commodities dampen gold's position as a safe haven, they said. Three important developments – a sale of 403.3 metric tonnes of gold by International Monetary Fund, the upcoming Central Banks Gold Agreement (CBGA) deadline and a new capacity coming online in Zimbabwe will, however, have little impact on gold prices, according to analysts. The yellow metal for June delivery traded at $ 880.12 on the DGCX on Tuesday. Gold for August delivery was priced at $878.67. Bullion prices shot beyond $1,000 in February, spurring speculations that the prices are headed for $1,500 and even $2,500 levels in the long run. "No body wants to rattle the markets. Gold may slowly slide down but not to levels that would turn the market upside down," said Ole S Hansen, a commodities analyst with Denmark-based Saxo Bank. Though, the gold markets respond to even the sale of gold scrap, they may not respond to the fresh 500,000 ounce production capacity coming up in Zimbabwe in September, Hansen said. Even the huge disposal of 403.3 tonnes by the IMF into the markets will be absorbed by the central banks, he said. While foreign companies have been attracted to Zimbabwean mines as the country has scrapped its export duty on gold, IMF has gained approval from the G20 countries to sell gold to help the Third World – particularly the African countries battling the cascading impacts of global economic crisis. Analysts say the impact of surge in equity markets on gold prices dwarfs these developments. "We expect the gold prices to first fall to $870 an ounce level and then to $850. It may find support at even lower levels in the coming months," said Sajith Kumar PK, Vice-President of JRG Commodities, a DGCX-registered commodities brokerage house.

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