Gold tumbles 100 on global cues

Gold tumbles 100 on global cues
Highlights

Taking weak cues from the global market and slack demand from jewellers, gold extended its slide for the second straight day as prices plunged Rs 100 to Rs 25,650 per 10 grams.

New Delhi: Taking weak cues from the global market and slack demand from jewellers, gold extended its slide for the second straight day as prices plunged Rs 100 to Rs 25,650 per 10 grams.

Bullion traders here said a weakening trend in the global market amid growing confidence in the US Fed to raise interest next month helped the dollar cement gains, eroding demand for the precious metals. The fall is estimated to be near six-year low.

Furthermore, a muted demand from jewellers and retailers pulled down gold prices, the traders said. Globally, gold retreated as much as 1 per cent to $1,067.58 an ounce in Singapore on Monday while it ended 0.43 per cent down at $1,077.20 in New York on Sunday.

On the other hand, in Delhi bullion market, the gold of 99.9 per cent and 99.5 per cent purity slumped by Rs 100 each to Rs 25,650 and Rs 25,500 per 10 grams, respectively. The precious metal had lost Rs 150 on Saturday.

Meanwhile, the US dollar rose 0.1 per cent against a basket of six major currencies, still close to an earlier seven-month high, hit as the euro fell on the expectations that ECB will ramp up its monetary stimulus next month.

A strong US currency makes dollar-denominated gold more expensive for foreign holders.

Similarly, the expectations of Fed to rising interest rates for the first time in nearly a decade, tend to weigh on gold, as they lift the opportunity cost of holding non-yielding assets, while boosting the dollar.

"I wouldn't be surprised to see prices fall below $1,000 as expectations of a rate hike affect sentiment," Natixis analyst Bernard Dahdah said.

Also hedge funds and money managers moved to bearish position in COMEX gold contracts, as prices fell to the lowest in nearly six years, US Commodity Futures Trading Commission data showed on Friday.

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