Gold at 3-week low; loses appeal to stronger dollar globally

As demand for precious metals wane with the current marriage season drawing to a close, gold nosedived by Rs 475 per 10 grams to a three-week low of Rs 28,840, in line with global prices which fell after political developments in France and Greece increased appeal of dollar.

Gold has shed Rs 910 in four straight days of trading. Barely a week ago, prices had soared to an all-time high of Rs 29,750 on May 5.

In Mumbai, standard gold (99.5 purity) dropped by Rs 385 to close at Rs 28,550 per 10 gm. The metal prices fell by Rs 370-410 in markets like Kolkata and Chennai.

The falling trend was seen in futures market as well. At MCX, gold for June delivery were ruling at Rs 28,492 per 10 gm at 1705 hours, down by 0.55 per cent from its previous close.

"Spot gold prices fell in the global markets as the political turmoil in Greece and the political developments in France firmed up the US dollar against all the major currencies especially Euro," JRG Wealth Vice-President and Research Head Harish Galipelli told PTI.

On the price outlook, Galipelli said that in the short term, gold could further undergo corrections to the Rs 28,000 per 10 grams level but it would also depend upon the USD - Rupee relationship.

He added that prices in the global markets have fallen more sharply than in the domestic market.

Reflecting the firming US currency, the dollar-priced gold in global markets fell by 1.1 per cent to USD 1,587.28 an ounce -- their lowest levels since January 3. Similarly, silver declined by 1.8 per cent to USD 28.92 an ounce -- their lowest levels since January 9.