Gold extended losses on Thursday in the domestic precious metal market as traders refrained from active participation in anticipation of a further price decline.
Standard gold in Mumbai fell 2.4 per cent or Rs 275 to close at Rs 11,190 per 10 gram following weakening global sentiment across the commodities basket despite the ongoing festive demand. Following suit, pure gold ended the day at Rs 11,260 per 10 gram on Thursday from its previous day’s level of Rs 11,530 per 10 gram.
In the international market, gold dropped to its weakest since October 2007 after the dollar rallied to a 1-year high against the euro, prompting selling from investors. Gold hit an intra-day low of $748.60 an ounce, down 0.5 per cent from $752.55/754.15 an ounce late in New York on Wednesday, before rebounding to $754.10/755.15 an ounce.
Gold has dropped around 6 per cent in the last two days — the biggest two day-drop since March. The euro tumbled to its lowest level in a year against the dollar on Thursday as the market focus returned to a souring economic outlook outside the US. The benchmark gold contract on the Tokyo Commodity Exchange, August 2009 fell 74 yen per gram to 2,616 yen per gram.
Since the beginning of the week, the fall in the yellow metal continued, recording a 4.73 per cent decline as against 8.04 per cent weekly decline in global prices.
According to an analyst, the yellow metal is holding high currently in India and the magnitude of the fall has not fully reflected in the local market because of the rupee’s depreciation.
Since the beginning of this week, the Indian currency has depreciated 2.15 per cent to close at 45.55 on Thursday against 44.61 on Monday thus, offering a breather to exporters. But, gold consumers are now expecting a correction in the value of the rupee to resume festive buying, he added.
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The precious metal fell in futures too with the contract for October delivery traded at Rs 11,343 per 10 gram early evening session against the previous day’s close at Rs 11,554 per 10 gram. The contract for delivery in April next year traded at Rs 11,780 per 10 gram against Rs 11,938 per 10 gram the previous day.
Consumers’ interest towards fresh investments in gold may remain weak throughout this fortnight because of the ongoing inauspicious period. Demand will pick up only during Durga Puja which will continue, if the market sentiment remains positive until Christmas, a trader said.
On NCDEX, Gold 100 gram contract for September delivery closed with a decline at Rs 11,230 per 10 gram on Thursday from Rs 11,371 per gram the previous day. The contract for October delivery closed at Rs 11,340 per 10 gram against its previous close of Rs 11,522 per 10 gram.