Gold plunges to an 11-month low of R27,550 per 10 gm

Gold prices, hit hard by a cash-starved India and a firm US dollar have tumbled further by Rs250 to hit an 11-month low of Rs27,550 per 10 grammes in the Delhi bullion market today.

Reports quoting traders said the market is blaming the poor demand from jewellers following the 8 November demonetisation for the fall.

Today's fall was in partial response to Prime Minister Narendra Modi's remarks in his monthly `man ki Bath' radio programme that the government will strive on with its anti-black money policies and extend the fight to `benami dealings'.

On the Multi Commodity Exchange (MCX) in Mumbai the February gold contract closed below the Rs27,000 level ar Rs26,961, reflecting the possibility for a further fall in gold prices.

Gold prices, which had shot up by over 20 per cent in August this year when prices touched a high of Rs3,000-3,100 per gramme, is now holding on to jus about 9 per  cent and losing further steam.

Silver also fell by Rs 210 to Rs 38,600 per kg on reduced offtake by industrial units and coin makers.

Traders said persistent fall in demand from jewellers and retailers in view of prevailing cash crunch largely weighed on gold prices.

The government had, on 8 November, scrapped old series Rs500 and Rs1,000 notes to flush out black money, leading to a cash crunch in the market.

Also, investors were clueless about future trends as major world markets such as Singapore, which rule price trends in local markets largely, were closed for holiday.

Meanwhile, gold in futures continue to trade below the 27,000 level in afternoon. The February contract of the metal fell to a low of Rs 26,916 per gram on MCX commodity exchange. It was trading lower by Rs 14 at Rs 26,980.00 per 10 gram in afternoon trade.

In the spot market, gold 99.9 per cent purity plunged by Rs250 to Rs27,550 per 10 gramme - a level not seen since February 4 when it had closed at Rs27,575 per 10 gramme. Gold 99.5 per cent purity too plunged by Rs250 to Rs27,400 per 10 gramme.