vishnuvega
24-07-2008, 07:52 AM
Consumers who were hoping against hope for a sharp fall in gold prices can breathe easy now. The yellow metal plunged Rs 630 to Rs 12,795 per 10 gm in Mumbai, the biggest fall in the last two years. The panic selling was triggered by the sliding crude and the strengthening dollar. Earlier, the metal’s biggest fall in a single day was recorded on June 23, 2006, when prices dropped Rs 500.
Market players said that gold was overbought in the past few days and a correction was due, adding more price corrections could be on the way. Most investors who had increased their positions since Monday have sold part of their holdings to avoid further losses. Besides, the stock market surge — powered by the UPA government’s trust vote victory late Tuesday — eroded the yellow metal’s appeal as an alternative investment tool, they said. “Demand for gold jewellery, which has fallen substantially in the past six months, is likely to pick up with the metal nearing Rs 12,500,” said Prakash Jain of the Jugraj Kantilal & Co in Zaveri Bazar.
Market players said that gold was overbought in the past few days and a correction was due, adding more price corrections could be on the way. Most investors who had increased their positions since Monday have sold part of their holdings to avoid further losses. Besides, the stock market surge — powered by the UPA government’s trust vote victory late Tuesday — eroded the yellow metal’s appeal as an alternative investment tool, they said. “Demand for gold jewellery, which has fallen substantially in the past six months, is likely to pick up with the metal nearing Rs 12,500,” said Prakash Jain of the Jugraj Kantilal & Co in Zaveri Bazar.