India, June 20 -- Gold and silver suffered sharp losses at the domestic bullion market on Thursday due to frantic selling by stockists and investors in the wake of a global commodity sell-off.
While gold fell Rs. 775 to Rs. 27,295 per 10 grams, silver plunged Rs. 1,935 to Rs. 43,115 per kg, tracking global markets, after the US Federal Reserve signalled gradual withdrawal of monetary stimulus.
Analysts expect the yellow metal to be in the range of Rs. 26,000- 28,000 in the next six months.
"US Fed meeting has opened door for further downside in gold," said Kunal Shah, head of research at brokerage firm Nirmal Bang. "The physical demand for gold has cooled off due to the recent fall in gold prices and also strict measures taken by the government to check high imports."
The government has hiked import duty on gold three times since 2012, including the recent 2% increase to 8% early this month, to curb demand. Besides, the Reserve Bank of India too has put restrictions regarding gold imports.
"Our view on gold is bearish and we expect the yellow metal to touch R26000 by the end of this month. Gold is likely to be in the range of R26000-28000 in the next six months," said Renisha Chainani, commodity analyst, Edelweiss Financial Services. "Fed announcement is bearish for all commodities."
Gold in London, which normally sets the price trend on the domestic front, dropped by 3.4% to $ 1,304.75 an ounce, its lowest since September 30, 2010. Silver fell by 6% to $20.08 an ounce, the cheapest since September 14, 2010.
"For western investors, there's certainly less incentive to hold gold at the moment," Mitsui Precious Metals analyst David Jollie said.
Huge gold imports have put pressure on the country's current account deficit - the difference between dollar inflows and outflows - which in turn is affecting the value of the rupee.
Published by HT Syndication with permission from Hindustan Times.