Gold tanks to 10-month low as RBI eases import curbs

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Gold prices tumbled to 10-month low and closed below the key ` 28,000 per 10 gram mark at the bullion market here today following frantic unwinding after the RBI eased curbs on import of the yellow metal. In contrast, silver gained further ground on stray demand from consuming industries. Standard gold (99.5 purity) tanked by a staggering 780 to finish at ` 27,690 per 10 grams from Wednesday’s closing level of ` 28,470.
Pure gold (99.9 purity) also plummeted by a similar margin close at ` 27,840 per 10 grams from ` 28,620. Silver (.999 fineness) moved up by ` 85 to conclude at ` 41,860 per kg from ` 41,775 yesterday.
The Reserve Bank yesterday eased gold import norms by allowing select trading houses, in addition to banks, to procure the precious metal to boost exports. The market sentiment turned highly volatile today following the apex bank’s decision.
Grappling with a burgeoning fiscal deficit, Finance Ministry and RBI last year jointly undertook several tough measures to curb import of the shiny metal of which India is the largest consumer in the world. However, the Government’s efforts to stem the widening gap in the country’s current account deficit triggered supply shortage and pushed gold prices to levels not seen for a long time last year.
The latest RBI move, which follows representations from jewellers, bullion dealers, banks and trade bodies, is expected to increase gold supplies and reduce prices.
Globally, gold continued to trade weak and held below the crucial $1,300 level on bullion-backed fund selling after latest Federal Reserve minutes hinted out rate hikes sooner rather than later.
Spot gold was bid lower at $1,298 an ounce in early European trade.
Source:Bullion Bulletin

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