Gold loses sheen on profit booking

Standard gold declined Rs 135 to close on Tuesday at Rs 11,055 per 10 grams in Mumbai on the global equity crash. Pure gold, too, followed suit and closed with a similar decline at Rs 11,105 per 10 grams.

The metal fell below Rs 11,000 per 10 grams in the afternoon, the lowest since January 7, amid nervousness among traders who ended with huge losses in the equity markets.

Selling pressure continued towards the end of the day, as traders with exposure in commodities were keen to book profits.

Si Kannan, an analyst with Kotak Commodity Services, said, "The correction was long overdue and was expected any moment." The escalation in gold prices was very speedy and, hence, the decline was also expected to be rapid, he added.

In London, however, gold slipped to $851 an ounce in early trade but recovered later to $861 an ounce on fresh booking by investment funds.

"Gold is likely to fall below Rs 10,500 per 10 grams in India towards the end of next fortnight on the lack of demand. At lower prices, the buying will begin," said Bhargav Vaidya, an analyst with B N Vaidya & Associates.

Gold had surged to a historic high of $914 an ounce on January 14, as investors rushed in to buy the metal on further weakness in the dollar and expectations of a sharp cut in US interest rates.

The precious metal rose more than 30 per cent in 2007.

However, the fundamentals remain upbeat for gold for the second half of the current calendar year.