Gold tanks to 10-month low as RBI eases import curbs

Gold prices tumbled to 10-month low and closed below the key Rs 28,000 per 10 gram mark at the bullion market here today following frantic unwinding after the RBI eased curbs on import of the yellow metal.

In contrast, silver gained further ground on stray demand from consuming industries.  

Standard gold (99.5 purity) tanked by a staggering Rs 780 to finish at Rs 27,690 per 10 grams from Wednesday's closing level of Rs 28,470.  

Pure gold (99.9 purity) also plummeted by a similar margin close at Rs 27,840 per 10 grams from Rs 28,620.  

Silver (.999 fineness) moved up by Rs 85 to conclude at Rs 41,860 per kg from Rs 41,775 on Wednesday.  

The Reserve Bank yesterday eased gold import norms by allowing select trading houses, in addition to banks, to procure the precious metal to boost exports.  

The market sentiment turned highly volatile on Thursday following the apex bank's decision.  

Grappling with a burgeoning fiscal deficit, Finance Ministry and RBI last year jointly undertook several tough measures to curb import of the shiny metal of which India is the largest consumer in the world.            

However, the Government's efforts to stem the widening gap in the country's current account deficit triggered supply shortage and pushed gold prices to levels not seen for a long time last year.            

The latest RBI move, which follows representations from jewellers, bullion dealers, banks and trade bodies, is expected to increase gold supplies and reduce prices.  

Globally, gold continued to trade weak and held below the crucial USD 1,300 level on bullion-backed fund selling after latest Federal Reserve minutes hinted out rate hikes sooner rather than later.            

Spot gold was bid lower at $ 1,298 an ounce in early European trade.