Gold prices on Wednesday dropped to an over four-month low of R26,000 per 10 gram on Wednesday in the national capital, tracking weak global market.
While gold lost R165 per 10 gram from Tuesday’s level, silver fell by R250 to R35,400 per kg, as demand from industrial users and coin makers waned.
Jewellers said low demand, persistent weakness in the global market and uncertainties ahead of the US Federal Reserve’s meet affected gold prices.
Global prices stay around 4-month low
Gold held above a four-month low in the global market in intraday trade on Wednesday, as investors remained cautious ahead of the conclusion of a Federal Reserve meeting amid speculations of a mid-year increase in US interest rates. The two-day Fed policy meeting started on Tuesday.
Spot gold rose just 0.2% at $1,150.60 an ounce by 1043 GMT, marginally higher than $1,142.86 hit in intraday trade on Tuesday, which was lowest since November 7 last year. Any increase in the interest rate may drive up the dollar and dampen the appeal of gold, which shares an inverse relations with the greenback.
Gold has fallen 3% so far in 2015 on expectations that the Fed could raise the interest rate soon. Although a firming labour market points at a strengthening US economy, the weak housing sector suggests the Fed is unlikely to be aggressive hiking rates after an initial increase. Acording to the latest data, housing sales in February crashed to their lowest in a year.
Holdings in the SPDR Gold Trust dropped 0.4% to 747.98 tonne on Tuesday.