Gold prices remain at 10-month low, cash crunch affects demand in India
Gold price earlier fell 1.26 per cent to $1,128.20 an ounce globally
Gold prices remained near its weakest level in 10-1/2 months for the second day, tracking a weak global trend affected by the dollar’s surge after the Federal Reserve raised interest rates and projected further hikes in 2017.
In India, the precious fell below the Rs. 28,000-mark after dropping Rs. 500 to over 10-month low of Rs. 27,750 per 10 grams today, NDTV Profit reported.
The existing cash crunch in the market after demonetisation also affected the price in domestic spot market as offtake by jewellers remained less, the report said.
Silver also fell below the Rs. 40,000-mark by tumbling Rs. 1,350 to Rs. 39,600 per kg.
In the international market, gold price dropped to 1.26 per cent to $1,128.20 an ounce, while silver fell by 5.06 per cent to $15.95 per ounce on Thursday.
The Federal Reserve raised funds rate to a 0.50-0.75 percent range on Wednesday, sparking a rally in the dollar.
"The Fed was more hawkish than expected, which re-started this dollar rally," ABN Amro analyst Georgette Boele was quoted by Reuters as saying.
"With yields rising in the United States and the dollar massively up, that's the worst possible combination for gold," Boele added.
In India, traders said sentiment was downbeat in the domestic market last few days in line with a weak global trend.
Moreover, the government’s decision to scrap Rs. 500 and Rs. 1,000 notes to flush out black money led to a cash crunch in the market.