The Hindu Business Line : Gold plunges to 3-month low on euro fall

GOLD prices plunged to below $416 an ounce (3-month low) in the London market on Tuesday forenoon following long liquidation spurred by the rise in dollar against the euro.

Experts see further slide to gold prices, possibly $ 410/oz. The `non' vote in the French referendum on the proposed European constitution and likely repeat of the same in the Netherlands tomorrow has seen Euro-$ fall through the key support of 1.250. It was testing 7-month lows below 1.240 in the forenoon.

Technical analysts at Barclays Capital see the latest break as throwing bearish signals warning of a test to critical levels at 1.2165 and possibly even 1.1585.

Gold looked extremely vulnerable to further lows.

The latest CFTC report showed that large speculators reduced their net long futures position by 51 tonnes to 123 tonnes, a three-month low.

The signs are not good for gold with traders in Asia reporting soft demand from both India and the Far-East, a London-based analyst pointed out. Import requirement in India has slowed down markedly (some estimates place the decline at 50 per cent) as the wedding season has drawn to a close and rural India is readying to plant the kharif crops.

Interestingly, silver has outperformed gold, although prices have eased back from May 27 high of $ 7.28/oz to $ 7.17/oz in the forenoon.

Our Mumbai Bureau adds: Pure gold (.999 fineness) prices slipped to a 4-month low of Rs 5,995 per 10 g on the Mumbai bullion market on weak demand, a trader said.

Pure gold .999-fineness opened at Rs 6,005 and closed at Rs 5,995down Rs 20 over previous close.

Standard mint also closed lower at Rs 5,960.

"Fresh buying for marriage season is almost over. Fresh demand is expected to pick up in mid-August," a deaeler said. Pure gold prices have declined Rs 200 for 10 g in the last four months.

Silver .999 fineness prices ended Rs 35 lower at Rs 10,770 a kg on dull demand.

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