BS:Gold hits 33-month low in global market, may crash more
Gold and silver prices fell sharply today touching 33 month low. Both the metals were trading around today's prices in September 2010 as investoRs digested comments from the US Federal Reserve that stoked feaRs of a scaling back of bond purchases.
Gold tumbled 3.4% on the previous session's settlement to $1,304.90 a troy ounce during European morning trade, its lowest price since September 2010.
However consumeRs in india have not been benefited as fall in rupee has prevented sharp fall in gold and silver. Hence despite the gold repeating fall seen in april, reaction from the Indian consumeRs will be different.
Chairman Bernanke said that if the FOMC’s economic forecast materializes, asset purchases will be completed by about this time next year. these comments resulted in investoRs selling gold and just before announcement of Fed's decision yesterday in US gold was trading at $1,375 per ounce but after that it started falling and today when China's flash PMI data came lower than expected and remaining consistently below 50 indicating weakness in its economy, all metals led by gold fell further.
Gold was trading at $1,313 per ounce (4.5% lower than price prevailing prior to Fed's announcement) while silver was $20.30 (nearly 6%) per ounce in afternoon today. prices fell below april's low levels.
In India however fall has been restricted to the extent of fall in value of rupee. Indian currency also fell today by nearly 2% and was trading around Rs 59.90 against a dollar.
Since India is price taker in gold, lower rupee means higher cost of imports and hence gold and silver prices were down 2.4 and 4.2% respectively pm MCX futures. gold was trading at Rs 27,298 per 10 gram before touching low of Rs 27,221 while silver was tradin at Rs 42,084 per kg after recvering from low of Rs 41,563.
Haresh Soni, Chairman of the all india Gem and jewelery trade federation (GJF) said that apart from indication of tapering off of bond buying programm in US and lower manufacturing data- PMI from China, gold prices exceeded fall because market was of the view that Indian consumeRs will not come and buy as they did when gold prices corrected in april.
Because of sharp fall in rupee against dollar and 2% import duty imposed last month has kept gold prices higher in India and hence indian consumeRs have not been benefited from the today's fall. Soni believes that Indian consumer will not be in ahurry this time to buy gold.
Ashok mittal, CEO of Emkay Commodities said that, "gold has broken its technical suport of $120 but if international gold closes below that than next technical target is $1270 and for silver the target is $19. However, that again will be technical level and investoRs should buy if there is improvement in fundamentals for gold buying."
