Gold slumps further; hits lowest level in over two years
Spot gold was down 1.9 percent to USD1,327 an ounce while silver shed nearly 2 percent to USD 22.11 per ounce.
Zee Media Bureau
New Delhi: Gold prices in international markets fell to their lowest level in more than two years on Tuesday as investors dumped their holdings on fears about central bank sales and worries about global growth.
Spot gold fell as low as USD1,321.35 an ounce and stood at USD 1,341.94, down USD10.81 per ounce while silver shed nearly 2 percent to USD 22.11 per ounce.
On Monday, the price of gold bullion tumbled another USD 125 per ounce in its biggest-ever daily loss. In percentage terms, Monday's 9 percent loss would be the biggest since 1983.
Bullion's collapse caught many veteran investors, who see gold as portfolio protection against inflation and other market risks, by surprise. Monday's drop eclipsed the rout on January 22, 1980, a day after gold hit its then-record USD 850 on global panic over oil-led inflation due to Soviet intervention in Afghanistan and the Iranian revolution.
There have been no sudden changes in the macro economic argument for gold in the last week, although numerous factors have kept gold from rising this year while investments like US stocks took off.
While last week's news that the Central bank of Cyprus might sell gold reserves to finance its European Union bank bailout did trigger a rush for the exits when bullion slid below the pivotal USD 1,500 an ounce threshold, few saw it likely to usher in a round of other official disposals.
The big question is whether gold has entered a lasting bear market after 12 years of consecutive yearly gains. Gold hit the lowest price since February 2011 and has now almost halved its rally since the 2008 economic crisis, leaving the metal around USD 550 below its record high of USD 1,920.30 set in September 2011.
It is down 30 percent from that high well in excess of the 20 percent considered a bear market milestone.
Recent signs that Fed officials appeared to be nearing a decision to start winding down their bond purchases to end stimulus contributed to the negative tone for gold, even though inflation has failed to materialize as feared during its rounds of post-financial crisis quantitative easing.
With Agency Inputs