Gold slumps Rs 120 to Rs 9,460

Standard gold slumped by Rs 120 to Rs 9,460 per 10 gm in Mumbai on Tuesday after two consecutive gains of Rs 150.

With the current decline, gold price has witnessed about 9 per cent fall in the last three weeks from the all-time high at Rs 10,665 on May 12.

Similarly, pure gold (99.9) fell by Rs 110 on Tuesday witnessing a total decline of Rs 1,200 from the peak level at Rs 1,0715 per 10 gm last month.

"The impact of volatility in commodities prices can been seen today across the board as no commodity is spared throughout the world. This is the consequence of the general cooling off after overheating last month," a trader said.

But traders are optimistic about the further movement of the yellow metal.

According to an analyst, gold prices may touch record-high levels within the next three years as higher inflation prompts investors to buy the precious metal as a hedge. Citigroup analyst John Hill said the gold price may touch the all-time high of $850 in the next three month.

Indian analysts have always been suggesting common traders to turn their assets into gold and sell in steps whenever they require to meet any other necessities.

Despite all supporting factors, gold for immediate delivery slipped to $629.5 an ounce in early Tuesday trade in London.

Bullion for immediate delivery may average $632 an ounce in 2006, compared with $445.39 last year. The forecast is 14 per cent higher than the earlier prediction of an international bank. Gold will average $700 next year and $750 in 2008, the Citigroup predicted.

Citing concern over US Federal Reserve's chairman, Ben S Bernanke's comment as "unwelcome" in recent increases in measures of inflation. He commented as the inflation is unsustainable.

Last month, the precious metal climbed to a 26-year high of $730.40 an ounce after the US Federal Reserve signaled concern about rising prices.

The yellow metal rose to a record $850 an ounce in January 1980 when the 1979 Iranian revolution cut oil exports. The move is similar today with Iran signalling resistance over the mandate of developed countries on its nuclear programme.

Gold has fallen 13 per cent since May 12 as funds and large speculators cut holdings after the metal rose by almost $200 an ounce from December 31.