Gold prices have hit an 11-month low at the Mumbai bullion market. The metal closed below Rs 29,000 per 10 gm as a sell-off gained momentum in line with global trends. The sell-off happened despite the approaching wedding season and Akshaya Tritiya when retail demand for gold peaks.
Gold finished the day Rs 500 lower at Rs 28,890 (per 10 gm). News agency reports said Thursdays holiday in the bullion market had restricted speculators from clearing their positions,so the pressure was acute Friday. The trigger was speculation that Cyprus may sell gold to finance its liquidity problems. India is the worlds largest buyer of gold,but even in the futures market the trend is on the downswing.
In global markets,the metal was heading for a 5.3 per cent decline this week,Reuters reported the third such drop in a row,and the biggest since December 2011. Gold is now 22 per cent below the record peak of $1,920.30 per ounce that it hit in September 2011.
Reuters quoted Societe Generale analyst Robin Bhar as saying,The scale of the decline has been absolutely breathtaking. We tried to rally and that just didnt get anywhere.
Other commodities too came under pressure,with Brent crude oil hitting an eight-month low. Contraction in US retail sales pushed stock markets lower,while the dollar rose as a safe haven for investors.
For India,the good news is that its import bill for crude oil has begun to ease up rapidly. Data from the petroleum planning and analysis cell of the oil ministry shows the price of the Indian basket has dropped to $103.17 per barrel as on April 11,an almost 3 per cent fall since last fortnight. This is the lowest level since the first week of November last year. The lower prices could ease the current account deficit of the economy in the new fiscal.