Spot gold prices in the domestic market are expected to remain weak over the next few days amid sluggish demand in jewellery, supported by a lower investment demand. Tumbling crude prices and a slightly stronger US dollar reduced the appeal of the metal as an alternative investment as gold generally tracks crude prices. In London, gold spot prices on Tuesday slipped below the $900-mark and entered negative territory. The yellow metal price dropped to a day?s low of $881 an ounce on Tuesday, down by nearly $34 an ounce or 3.71% during the past 24 hours. In Mumbai, the spot gold standard also fell sharply by nearly Rs 500 to trade at Rs 12,050 per 10 gm in the past two days.
On the MCX platform, gold August contracts (expiring on August 5) also fell sharply by Rs 400 to trade at Rs 12,100 on Tuesday on continued selling pressure on weak overseas markets, a local dealer said. ?Fresh demand for gold jewellery from consumers is expected to remain weak over the next few days as buyers chose to wait for lower prices with the busy season still two months away. There are no buyers and everywhere liquidity is tightening,? a leading jeweller said.
Market reports said that about a tonne of old jewellery sale was reported in Mumbai alone in July. Jewellery, as the largest component of physical demand, has been vulnerable to high and volatile gold prices. ?In addition to the impact of developments in gold, jewellery has also been adversely affected by the global credit crunch, and this has created uncertainty in the markets. The demand for investment is expected to recede and average at $850 in 2009,? reported Natixis Commodity Markets.