LONDON : This week International Monetary Fund (IMF) and the European Union announced a surprise and shock package of $1 trillion for rescuing the Euro from the looming economic threat.
The bailout package, announced after the Greece economic tragedy threatened to spread to other EU nations, not only stunned the equity markets across the globe but also shocked the gold market.
Even as the equity markets zoomed following the unveiling of the bailout plan, gold prices plunged across the globe.
The reason is that with the IMF-EU scheme pledging around $1 trillion to rescue the Euro, stock markets witnessed a bull run in the US, Europe, India and other nations.
With this, gold lost its safe haven image and the metal prices plunged within hours of the unveiling of the scheme.
In fact, safe-haven buying seems to have eased for now. Now, investors will have to wait and see what the hedge funds and others do, there is still a strong chance gold can break through the record high.
Gold had hit the record of $1,226.10 last year. The world’s largest gold-backed exchange-traded fund, SPDR Gold Trust, said its holdings stood at a record high of 1,188.498 tonnes as of May 7, from 1,185.787 tonnes in the previous business day.
In India, after the EU bailout news spread, gold prices fell over 3 percent, tracking weak overseas markets, triggering physical demand ahead of a key festival next week.
India, the world’s largest consumer of the precious metal, celebrates Akshaya Tritiya on May 16, an auspicious day to buy the yellow metal for lasting prosperity.
So, jewellers are now buying for Akshaya Tritiya after a gap of many days.
The most-traded gold June contract on the Multi Commodity Exchange was trading 2.79 percent Rs 17,433 per 10 gm on Monday.
International gold, which guides the domestic markets, was trading at $1,189.75/1,190.55 an ounce as against the previous close of $1,207.75/1,208.75.
A strong rupee, which made the dollar-quoted yellow metal cheaper, helped sentimen
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