Gold, silver lose sheen amid sluggish demand, weak global cues

CHENNAI: It was a double whammy for the Indian stock market and those who were looking for gold as an asset class. The price of gold in Chennai saw a significant drop on Tuesday, continuing a recent trend of declining rates. Joining the issue was silver, losing its shine along with the yellow metal.

“The valuation of the stock markets and the gold, both have been hit badly over the last few days. Several traders in Chennai are left with little investment options and are enquiring about high-yield bonds and fixed deposits. The market is under pressure, particularly the small and midcap stocks continue to dip, but the good news is that though FIIs are selling, domestic investors continue to invest through mutual funds,” opined S Kamesh Raj, a trader based in Chennai.

"The main reason behind the decrease in gold rate is due to the US presidential elections. President-elect Donald Trump’s statements like ‘the economy would be better’ and he would ‘stop the war’, etc., have had an impact,” Raj said.

Another reason is that investors are now investing in bonds and cryptocurrency, which has decreased the demand for gold. The current rate would continue for another week or two and would fluctuate until Christmas and there would be a sudden increase during the season,” said Gold Guru Santhakumar, secretary of Madras Jewellers and Diamond Traders Association.

“Gold prices have dipped due to the global cues and US polls. but the local demand for gold is higher due to the festival and wedding season. Any further dip in gold price should be seen as an investment opportunity,” said A Shankar, a goldsmith in Sowcarpet.  

GOING SOUTH

*The price of 22-karat gold fell by Rs 135 per gram to Rs 7,085, which works out to a steep fall of Rs 1,080 per sovereign

*Gold was priced at Rs 56,680 per sovereign on Tuesday. Silver also dipped, with one gram now selling at Rs 100, down by Rs 2

*BSE Sensex tumbled by nearly 821 points and Nifty plunged below 23,900 level due to heavy selling in banking, power and auto shares

*The fall has caused investors wealth to erode by Rs 5.29 lakh crore to Rs 437.24 lakh crore (USD 5.18 trillion)