New Delhi: Gold futures prices on Tuesday dipped below Rs 26,000-level to trade at a 15-month low of Rs 25,270 per 10 grams as participants indulged in creating short positions after the metal had its biggest one-day drop since 1983 in global markets.
    
Gold prices, which had been plummeting since last week, fell by another Rs 364, or 1.41 percent, to trade at a 15-month low of Rs 25,270 per 10 grams for delivery in June at the Multi Commodity Exchange. It clocked a turnover of 93 lots.
    
Similarly, the metal for delivery in far-month August shed Rs 266, or 1.02 percent, to Rs 25,835 per 10 gm in 93 lots.

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Market analysts said sustained weakness in the overseas markets where gold plunged over 9 percent on Monday to its lowest price in two years, put pressure on the precious metal prices here.
    
Worries over Chinese growth and a possible sell-off by struggling Cyprus's central bank also pushed down the precious metal's prices in the futures trade here, they added.
    
Globally, gold plunged 9.35 percent to USD 1,360.60 an ounce, the lowest since level since March 8 in New York on Monday. Prices have dropped 14 percent in the previous two days.

GOLD IN INTERNATIONAL MARKET

Gold tumbled to a more than two-year low around USD 1,300 an ounce on Tuesday, extending a brutal sell-off amid fears of central bank sales and global growth, as investors frustrated by the metal's lackluster performance dumped their holdings.
    
Bullion posted its biggest ever daily drop in dollar terms in the previous session, catching many gold bulls and veteran investors by surprise. Gold has now fallen about 20 percent so far this year after an unbroken 12 years of gains.
     
The typically safe haven asset has failed to capitalise on tensions in the Korean Peninsula even as Pyongyang made new threats of military action, and has been hit by uncertainty over the US Federal Reserve's stimulus programme.  


    
"This is a kind of panic selling. There must be the end of it some time in the near future, but the market is still very shaky," said Yuichi Ikemizu, branch manager for Standard Bank in Tokyo. "We just have to wait until this panic selling subdues," said Ikemizu, who was reluctant to peg a support level for gold

Cash gold fell as low as USD 1,321.35 an ounce and stood at USD 1,341.94 by 0311 GMT, down USD 10.81. The metal is nearly USD 600 below a lifetime high around USD 1,920 an ounce hit in September 2011.

US gold futures for June delivery fell more than 2 percent to the weakest in more than two years, while the most active bullion contract on the Tokyo Commodity Exchange sank almost 10 percent.
    
Monday's drop of around USD 125 per ounce in cash gold eclipsed the rout on Jan 22, 1980, a day after gold hit its then-record USD 850 on global panic over oil-led inflation due to Soviet intervention in Afghanistan and the Iranian revolution.
    
Market analyst for commodities and energy technicals, Wang Tao, expects gold to fall further to USD 1,245 per ounce, driven by a fierce wave C.
    
Gold hit an 11-month high in October last year after the Fed announced its third round of aggressive economic stimulus, raising fears the central bank's money-printing to buy assets would stoke inflation.
    
But the gain was erased by a rally in equities, talks the Fed could soon end its bullion-friendly bond buying programme, and concerns other indebted euro zone countries could follow Cyprus' plan to sell bullion reserves to raise cash.
    
Heavy outflows on global gold exchange-traded funds, which cut holdings to their lowest in more than a year, could also mark the end of a love affair between gold and investors.
 
"The fall in gold prices is reminiscent of some of the market capitulations seen during the global financial crisis when leveraged investors were required to sell assets to maintain balance sheets and preserve liquidity," said Ric Spooner chief market analyst at CMC Markets in Sydney.
     
"The extent of leverage is now much lower and this may see more orderly conditions return to the gold market sooner rather than later. Markets will also be sensitive to any further information on the situation in Boston and whether or not it has any geopolitical implications."
    
Physical dealers saw inquiries from jewellers following the latest sell-off, but there were no signs of buying related to tensions between the two Koreas or bombings in Boston, which killed three people.
    
It was the worst bombing on US soil since security was tightened after the attacks of Sept 11, 2001. President Barack Obama promised to hunt down whoever was responsible.
 
Premiums for gold bars edged up to USD 1.70 to the spot London prices in Singapore on Tuesday from USD 1.20 on the previous day, but dealers had yet to see a surge in demand from jewellers and speculators.
    
"I think with a further reduction in gold prices, premiums may go up further. The demand is there, but the Thais are still on holiday and physical offtake in Hong Kong is not fantastic," said a dealer in Singapore.
    
In other markets, the yen firmed against the dollar and the euro while commodities extended their sharp declines after investors dumped risk assets overnight, worried over slowing growth in China and the US took hold.

(Agencies)

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