Festive spirit fails to enhance bullion's sparkle

Mumbai: The special 'Diwali Muhurat' trading to mark the start of Samvat 2072 at the bullion market here saw precious metals dropping to multi-month lows due to frantic unwinding from stockists and jewellery traders.

Stretching its downward spiral for the third session, gold plunged sharply to hit a three-month low.

Gold prices fell due to subdued retail buying interest as well as poor seasonal off-take on widespread expectations of further fall in prices despite ongoing festivities.

Silver also encountered heavy selling pressure from speculative traders coupled with sluggish offtake from consuming industries.

Domestic sentiment turned bearish and extremely volatile after the metal plummeted to multi-month low in worldwide trade following unexpectedly hawkish comments from the Federal Reserve as well as fears over an imminent rate hike in December, fuelling a negative outlook for the metal in near term.

The festive season did not bring the kind of momentum that was hoped for despite prices ruling lower compared to last year against the backdrop of uncertain global environment a trader commented.

Standard gold (99.5 purity) dropped by Rs 164 to end at Rs 25,571 per 10 grams compared to Tuesday's closing level of Rs 25,735.

Pure gold (99.9 purity) also fell by a similar margin to settle at Rs 25,721 per 10 grams from Rs 25,885 earlier.

Silver (.999 fineness) slumped by Rs 489 per kg to finish at Rs 35,001 as against Rs 35,490 previously.

On the global front, gold was trading a tad higher at USD 1,087.70 an ounce in early European trade, while silver quoted little changed at USD 14.39 an ounce.