Diwali fails to arrest gold’s fall

“Globally, institutional money is not flowing into gold as dollar is strengthening due to the possibility of an interest rate hike by the US Federal Reserve. In the domestic market, the gold prices are in a downward trend and people are little bit hesitant to buy gold in large quantities. Since there are lot of uncertainties with regards to gold prices, people are postponing their purchases,” said C.P. Krishnan, whole time director, Geofin Comtrade.

Standard gold (99.5 purity) slipped by Rs 115 to end at Rs 26,275 per 10 grams from overnight close of Rs 26,390. Pure gold (99.9 purity) slipped by a similar margin to finish at Rs 26,425 per 10 grams compared to Rs 26,540 previously. The current gold price is 40 per cent lower than the all-time high that it touched in 2011, fuelled by massive financial stimulus programmes.

Typically, gold price rises in the October-December quarter due to heavy festive demand from India on account of Diwali and also because of a higher demand from the holiday season in China, the second largest buyer of yellow metal. This year, however, the gold price languished near a four-week low as global investors dumped the metal on expectations the Fed Reserve’s rate hike.

In the global market, it was trading at $1,131.70 an ounce. If the price dips below $1,100, traders expect some support as seen during July, when the buyers of physical gold chipped in to support the price.