Mumbai/ Chennai, Apr 14 () : The crash of gold prices has sent shockwaves. It was seen as the safest investment but now seems to have burst, finally.
Four percent has declined in the international market since yesterday evening. In India, the decline was 3.5% of gold and silver prices too fell yesterday. Most analysts predict that the downturn would continue.
IN India‘s bullion market in Mumbai’s Zaveri Bazaar, gold traded at a 13-month low, while silver was at a 16-month low. Gold lost Rs 1,010 to finish at Rs 27,880 per 10g and silver closed at Rs 50, 605 per kg to Rs 1,890 lower. In New Delhi and Chennai market, gold fell by Rs 1,250 to close at Rs 28,350 per 10g.
Prices came under pressure, following fears that central banks of struggling nations of the European Union, would follow Cyprus who said would sell gold reserves to raise about euro 400 million to meet its debt.
By World Gold Council’s data, Spain, Greece, Italy, Ireland and Portugal hold 3230 tonnes of gold and Cyprus holds only 13.9 tonnes of gold. It is worth about Euro 125 billion. It however recovered by four percent.
The tumble started when Goldman Sachs gave a sell call and lowered US gold to $1450/Oz this year and next year to $1,270 oz. Indian gold prices are going down to Rs 25,000 per 10gm. It started a dream run in 2001 and till September 2011. It touched $1900 per oz.
Yellow metal gave 700% returns on investment. The decline started with 22% and the trend seems to continue.
Chennai jewellers and the pan-Indian retail jewellery chains are now banking on sales increasing with the upcoming wedding season. Some are not optimistic since there is a lack of demand, despite prices coming down.
Gold loan companies are fearing that with prices coming down. those who pledged the yellow metal might not take it back.