Mr. Prithviraj Kothari, MD – RSBL – Record Breaking drop for Gold & Silver in a Single Day
Gold and Silver dropped drastically on Friday. Gold was down by 6 percent and silver 8 per cent. Gold was running at a 15 month low at $1484 and dropped by almost 80 dollars in a single trading day.
By Friday evening, gold dropped by Rs.1,050/- per 10 gram and was trading at Rs.28,180/- while silver dropped by Rs.2,350/- and was trading at Rs.49,350/- per kg in the Indian markets.
Even after markets closed, gold in the international markets dropped on Friday mid night. Gold slided around 20 dollars further late in the night.
This downfall effect was seen in the domestic markets on Saturday. Gold dropped by Rs.300 trading at Rs.27,900/- and silver dropped by almost Rs.900/- trading at Rs.48,900/-.
The main reason cited behind was gold sell off by central bank. Some 158,200 taels of gold bullion ( roughly six tonnes) were sold in six auctions held by the State Bank of Vietnam.
There were news that as soon as the international markets opened, Merryl Lynch sold 4 million ounces of gold.
Heavy ETF selling was also seen in the markets.
What triggered panic selling amongst investors was a statement by Draghi. During a press conference he said that while Cyprus doesn’t have to sell its gold, any money that is raised from the sale must go towards covering the losses from the emergency loans to country’s banks.
This resulted in panic selling.
The important US data released on Friday gave an indication that US wholesale prices aren’t rising. Any such signal will prompt investors to sell old.
The next target for gold is 1450$ as gold is expected to decline further on the lines of a strengthening US economy