Gold prices fell by Rs 1,250 per 10 gram to sell at Rs 28,350, mostly on speculation, as prices in the global market fell steeply by $84 per ounce. All India Sarafa Bazar vice-president Surender Jain said the fall was breathtaking.
“This kind of a one-day fall has not been seen in the domestic market. The decline is breathtaking,” Jain told Deccan Herald.
He said future trading of gold was on the rise, so the speculations in the bullion market. The present slide in gold prices in the Indian market was largely due to speculations in the futures market. Jain said the trend could continue for some time before the price became stable in the domestic market.
Gold futures trading slipped to Rs 28,000 on the Multi Commodity Exchange on Saturday as speculators remained net sellers.
Retail buyers of physical gold, however, showed less appetite for the yellow metal as they waited for further price correction.
Other Bullion traders said the slump in the Indian market was on the back of the global economy showing signs of improvement and strengthening of the dollar that led investors to turn to other safe haven assets than the precious yellow metal.
They saw the gold price turning after a 12-year rally on the back of a recovery in the western economy.
Traders said gold would continue to lose its sheen if the dollar kept gaining strength and the pace of growth in the US and other developed economies accelerated.
Gold prices continued to fall below Rs 30,000 per 10 gram the entire week. Saturday's level of gold prices were last seen in April 2012.
Silver also recorded a fall of Rs 2,500 and sold at Rs 50,100 per kg. Traders said they saw a fall in demand from the industrial sector but the price fall sharpened after a fall in prices to the tune of $ 25.85 an ounce in New York on Friday.
Gold crashed below $1,500 an ounce in the international market on Friday, its lowest level, triggered by selling by gold exchange traded funds and speculative selling by investors. Speculation was also rife over possible gold sale by Cypriot Central Bank along with other debt-stricken euro zone members to tide over financial crisis. This led to further fall in international gold prices.
The industrial metal, silver, too, crumbled to re-test 15-month low and ended below the Rs 51,000 per kilo mark.
The shiny metal lost a massive Rs 1,010 or 3.50 per cent per 10 gram, registering its second steepest plunge since August 25, 2011. While silver tanked by a hefty Rs 1,890, or 3.60 per cent per kilo.
"Domestic sentiment is extreme negative at this juncture and investors are taking out money fearing the prices of yellow-metal may fall further as it is more vulnerable to global momentum where it is undergoing a drastic correction phase on improving economic environment, a bullion dealer said.
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