The rising gold price took a break on Tuesday with domestic price on the Multi-Commodity Exchange (MCX) falling by more than Rs.500 to Rs.30,123 (10 gram) late evening. The reaction followed global cues as international gold prices eased on news of the Russian President ordering withdrawal of troops from the areas bordering Ukraine.
Prices were hovering around $1,340 an ounce levels. Earlier, international gold scaled a four-month high on news of the Russian intervention and international gold has moved up 12 per cent this year on the back of hopes of a global economic recovery.
“We had already seen a rally, but sustainability was the issue,” Kishore Narne, Head, Commodities & Currency, Motilal Oswal Commodity Broker, said.
“The rally from February to date saw a rise of 7 per cent and the Russia-Ukraine conflict drove prices last week. Now with the unlikely escalation into war, there appears to be a pull-back”.
C. P. Krishnan, whole-time director, Geojit Comtrade, a commodity trading outfit, felt the price spike was due to tensions and “some hedging that took place. It tested the resistance level of $1,356 and then reacted”.
“This is not the festive season,” said Suresh Hundia, President-Emeritus, Bombay Bullion Association. “So, there is no demand and anyway there is severely restricted supply”.
With India’s restrictions on gold import continuing, the market was worried that smuggling continued at 1-3 tonnes a month. The premium was now $85-150 an ounce, Mr. Narne said, adding that gold would hover between Rs.29,300-29,500 or $1,300 an ounce in the near-term.
