Gold prices melt on global heat

MUMBAI: A steep fall in gold prices in overseas markets influenced trading here as the metal recorded losses between Rs.290 and Rs.110 per 10 gram across the board on Tuesday on heavy selling by stockists.

Selling was triggered after gold plunged in overseas markets, which normally set price band in domestic markets. Kolkata suffered the most by losing Rs.290 at Rs.8925 per 10 gram followed by Mumbai with a loss of Rs.205 at Rs.8,835.

In Chennai, gold fell by Rs.180 at Rs.9,000 and in Delhi by Rs.110 at Rs.9,020 per 10 gram respectively as selling pressure further gained momentum on off season in the face of negligible buying by jewellery fabricators.

Market sentiment turned weak on reports of gold falling below a psychological figure of 585 dollar an ounce level for the first time in almost two months on strengthening dollar and prospect of rising interest rates, eroding the appeal of the precious metal as an investment.

The gold in Asian markets fell $7.45 to $596.80 an ounce. Gold has fallen 18.2 per cent since it reached a 26-year high of $730.40 on May 12.

Commodity markets including metals remained bearish amid concern that rising interest rates world-wide might curb demand and helped in pulling down prices.

Central banks in Europe, India, South Korea and Thailand last week raised interest rates, and investors expected that the US Federal Reserve might do the same on June 29 to curb inflation.