Gold hits 4-year low on weak global cues, down Rs 150

Considerable fall in demand from retailers as well as jewellers on hopes of further dip in prices dampened trading sentiments

Falling for the third straight day, gold prices dived by another Rs 150 to trade at almost four-year low of Rs 25,550 per 10 grams at the bullion market on Tuesday after the yellow metal tumbled for the ninth straight  day in global market.

Furthermore, absence of seasonal buying by jewellers also weighed on the gold prices.

On the other hand, silver managed to recover some grounds on the back of fresh demand from consuming industries and rose by Rs 100 to Rs 34,300 per kg.

Bullion traders said global sell-offs in gold and strengthening dollar amid prospects for higher US interest rates have negatively impacted the precious metals and dragged down to almost four-year low in the national capital.

The Federal Reserve is moving closer to hike borrowing costs this year as the US economy improves, strengthening the dollar and eroding demand for gold.

Considerable fall in demand from retailers as well as jewellers on hopes of further dip in prices, too dampened trading sentiments, they said.

Globally, gold in New York, which normally determines price trend on the domestic front, fell by another 3.14 per cent to $1,097.70 an ounce in Monday's trade.

In the national capital, gold of 99.9 and 99.5 per cent purity tumbled Rs 150 each to Rs 25,550 and Rs 25,400 per 10 grams respectively, its weakest level since August 8, 2011.

The precious metal has now lost Rs 700 in the three days.        

"Movements in gold suggests that the precious metal prices may come further down and breach Rs 24,000 level in coming days," said a bullion trader.

In line with overall trend, sovereign fell by Rs 200 to close the day at Rs 22,500 per piece of eight grams.

However, silver ready recovered by Rs 100 to Rs 34,300 per kg and weekly-based delivery by Rs 350 to Rs 33,950 per kg.

Silver coins remained unchanged at Rs 49,000 for buying and Rs 50,000 for selling of 100 pieces.

Image: Gold dust; Photograph: Reuters