Gold slumps to a near 3-year low as Indian demand ebbs
26 Jun 2013
Gold prices tumbled to a near three-year low, dropping as much as 2.6 per cent to $1,244 an ounce in overseas markets, amidst declining seasonal demand for the yellow metal in India, induced in part by discouraging government policies. A firmer dollar also affected gold's market performance.
Demand for gold in India has been falling since the government imposed new rules to discourage gold buying in an effort to reduce a record current account deficit.
Cash bullion dropped as much as 2.6 per cent to $1,244 an ounce, the lowest level since 13 September 2010, and was at $1,248.75 at 2:50 p.m. in Singapore. The metal lost 22 per cent since the start of April and looked heading for its biggest quarterly loss in nearly a century.
Spot gold fell 2 per cent to $1,251.50 an ounce by 0413 GMT. Gold for immediate delivery fell to $1,243.94 earlier - its lowest since September 2010.
The metal has now lost 10 per cent, or about $140 an ounce, since the beginning of last week and is down 25 per cent so far in 2013 even as the dollar index climbed 5 per cent during the period. Gold is now set for the biggest annual decline in more than three decades.
Cash silver was trading at $18.89 an ounce, down 34 per cent in the April-June quarter and looks set for the biggest drop since the January-March 1980 quarter.
Spot platinum fell nearly 2.4 per cent to $1,318.65 an ounce, the lowest since November 2009, before trading at $1,323.55. Palladium dropped 1.6 per cent to $655.10 an ounce.
Gold, which rallied for 12 years from 2000 through 2012, saw investor confidence declining in 2013. Assets with the SPDR Gold Trust, the largest bullion-backed ETP, declined 28 per cent during the year, erasing $34 billion from the value of the fund. Billionaire investor George Soros and funds run by Northern Trust Corp. and BlackRock Inc cut holdings in the SPDR in the first quarter.
The number of hedge funds investing in gold globally shrank to 290 in May, the lowest level since 2010, from 310 in December, with their assets slumping on losses and redumptions, according to EurekaHedge Pte Ltd, a Singapore-based fund-research company.In India, Reliance Capital recently announced a halt to its trading in bot physical gold and ETF.