Gold nosedives to hit 2-year low on global meltdown

Gold suffered a big jolt and plunged sharply to touch a two-year low at the bullion hub here as panic-stricken investors and speculators went on a selling spree sparked by global liquidation worries.

The yellow metal's collapse in overseas markets predominantly triggered a fear among domestic investors forcing them to unwind their position heavily after a long weekend.

Pure gold (99.9 purity) also tumbled by Rs 520 to end at Rs 25,400 per 10 grams from Rs 25,920 previously.

This is the biggest fall so far this year for the yellow metal.

Tough measures taken by both the government and central bank to curb gold import amid slowing investment demand against the backdrop of a strong rally in equities, which is emerging as a preferred investment asset class, mainly took some sheen out of the metal.

Weaker domestic demand in the wake of slowdown in seasonal buying as well as higher domestic gold inventories also weighed on price movements, a bullion trader said.

Silver, mirroring the overall bearishness, also took a steep plunge on the back of heavy stockists selling.

Silver (.999 fineness) slumped by Rs 340 to conclude at Rs 34,650 per kg as compared to Rs 34,990 last weekend.

Globally, the shiny-metal witnessed a catastrophic sell-off and crashed through the crucial USD 1,100 per ounce mark to trade its lowest level in five years following a massive unwinding by gold ETFs as well as long speculative positions by investors.

Gold has been under intense heavy selling pressure in recent weeks on strengthening dollar value and expectations that the Federal Reserve will raise interest rates for the first time in eight years on the back of steadily improving US macro-economic situation.

Heightened uncertainty in international commodity markets amid geopolitical developments in the aftermath of Greek debt deal and the historic nuclear agreement between Iran along with the world powers too weighed on trade.

Spot gold was substantially lower at USD 1,112 an ounce in early European trading and silver was down at USD 14.75 an ounce.

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