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G. Chandrashekhar

MUMBAI: If anyone thought gold would stay firm after registering a sharp rise (jumped to $428.50 an ounce) following Thursday's London bomb blasts, there was only disappointment. The yellow metal corrected down to less than $423 an ounce the following day, the level it had been trading for most of the week.

Interestingly, the gold market behaved the same way it did after the Madrid bombings when prices fell 2 per cent two days after the event, before the prices then rose significantly over the subsequent two weeks. Whether gold will follow the same pattern this time too remains to be seen.

The underlying bullish sentiment towards gold has dropped notably in recent months, according to Mr. Kamal Naqvi, precious metals analysts with Barclays Capital who cited the poor performance of gold equities and gold ETFs (exchange traded funds) as evidence.

At the same time, gold cannot be sold short in the environment of rising terrorism concerns as the metal's role as safe haven may get a further boost with blasts in the world's bullion centre, he added.

Silver followed the yellow metal, having jumped to $7.03/oz before correcting down to below $7/oz.

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