India gold falls to 18-week low

Traders continue sell-off on margin pressure from other asset classes, trend may go on for some time.

Gold continued its downward journey and slumped to a four-and-a-half-month low on Friday in early London trade due to heavy selling pressure by speculators, in line with the meltdown in equity markets.

The yellow metal slumped to trade at $1,681.97 an oz in early afternoon trade in London but recovered to trade later at $1,694 an oz, a decline of 2.75 per cent from the previous day’s $1,740.13 an oz. Silver fell to $32.30 an oz and gained a bit later to trade at $32.67 an oz, a seven-month low.

Gnanasekar Thiagarajan, Director of Commtrendz Research, feels the fall in gold prices is because of appreciation in the dollar. Investors have started selling their safe haven commodity, gold, to cover part of their mark-to-market losses (writing down the value to current amrket levels) in other asset classes, in the wake of falling global equity and currency markets.

Recently, Marc Faber, global investment analyst and author of ‘The Gloom, Boom & Doom’ report, had said, “The gold price is extremely overbought and could easily drop toward the 200-day moving average – that is, between $1,500 and $1,600 an oz.”

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Posted by VBN on Sep 24 2011. Filed under Gold. You can follow any responses to this entry through the RSS 2.0. You can leave a response or trackback to this entry