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Gold below Rs 26k after 3 years |
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MUMBAI: Gold prices in the city's bullion market fell below the Rs 26,000 per 10-gram mark for the first time in over three years as global prices fell to over four-year low as investors are now more comfortable in taking risky bets than hedging their risks by holding the yellow metal. In the local market, gold prices fell by about Rs 1,000 and at 10pm, it was trading at Rs 25,932, Nakoda Bullion, one of the leading bullion traders, quoted. The last time gold traded below Rs 26,000 was in October 2011. The sharp fall in gold prices was also because of selling by speculators, market players said.
Along with gold, silver prices too fell sharply due to huge speculative offloading. At 10pm, it was trading at Rs 36,700 per kg, down from Rs 38,100 on Thursday and Rs 40,500 at the start of the week.
Domestic gold prices are linked to global prices, which is quoted in US dollars. So any change in global prices and the rupee-dollar exchange rate directly impacts the price of gold here. Jewellers also pointed out that the domestic gold prices could fall further if the government reduces the 10% customs duty on gold. "Because of the customs duty, gold prices are 10% higher than the comparative international prices. If the customs duty is cut to the pre-July 2013 level of 2%, domestic gold prices will fall further," a top Mumbai jeweller said. Back-of-the-envelope calculations show that if customs duty is cut to 2% now, gold prices would be hovering around Rs 24,000 level.
A decision to cut import duty on gold by the government will also cut down smuggling of yellow metal into the country, which has gone up substantially.
In the international market, gold was trading at $1,166 per ounce late on Friday, compared to Thursday's close at $1,204. Bank of Japan's decision to expand its bond buying programme to help its economy with extra money also led to the sharp drop in gold prices, reports said.
Source : timesofindia.indiatimes.com
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