Gold hits 30-month low in global market

Gold hits 30-month low in global market

Gold prices tumbled to their lowest in more than two-and-a-half years on Thursday and silver fell more than 6 per cent after the US Federal Reserve gave its most explicit signal yet that it plans to bring the era of easy money to an end.

Gold plunged after Fed Chairman Ben Bernanke said on Wednesday the US economy was expanding strongly enough for the central bank to begin slowing the pace of its bond-buying stimulus later this year.

Its fall picked up momentum after it broke through its April low at $1,321 an ounce, a key support level, knocking it to a low of $1,285.90, down 4.5 per cent and its weakest since September 2010.

Spot gold was down 3.5 per cent at $1,302.90 an ounce at 1141 GMT, while US gold futures for August delivery were down $71.40 an ounce at $1,302.60.

"For western investors, there's certainly less incentive to hold gold at the moment," Mitsui Precious Metals analyst David Jollie said.

"The markets have clearly decided that the withdrawal of QE is bad for gold prices," he said. "The risk of the euro zone falling apart is less, the risk from the banking system is less, and prices certainly haven't been going up for a while."

Bonds, shares and commodities fell sharply around the world on Thursday and the dollar rose after Bernanke's comments.

The ultra-loose monetary policy brought in by the Fed to boost US growth, which kept interest rates at rock bottom levels while stoking concerns about inflation, was a major factor fuelling a more than decade-long bull run in gold that took prices to record highs in September 2011.

Indications that the policy was nearing an end have helped push prices down more than 20 percent this year after 12 straight years of gains.

Indian gold prices tumble

Gold and silver tumbled in the national capital on Thursday on heavy selloffs by stockists, triggered by a weak trend in overseas markets.

While gold fell by Rs 400 to Rs 28,000 per ten grams, silver plunged by Rs 1,500 to Rs 43,100 per kg on poor offtake.

Traders said sentiment dampened after gold fell to the lowest in more than 2.5 years after US Federal Reserve Chairman Ben S Bernanke said asset purchases may be reduced later this year as the US economy recovers.

However, marketmen said, weakening rupee, which made imports costlier, cushioned the fall to some extent.

Liked the story?

  • 0

    Happy
  • 0

    Amused
  • 0

    Sad
  • 0

    Frustrated
  • 0

    Angry