Gold prices in Mumbai plunged by Rs 520 per 10 grams as the yellow metal fell as much as 4 per cent to their lowest in more than five years in global markets on Monday as sellers in top consumer China offloaded the metal.
With investors finding less and less reason to hold gold as an insurance against risk and the dollar strengthening ahead of what is expected to be the first increase in US interest rates for nearly a decade, spot gold fell $45.55 to its weakest since March 2010 at $1,088.05 an ounce shortly after the Shanghai Gold Exchange opened, with volumes soaring to a record.
It regained some ground, trading above the key $1,100 support level, but was still down 1.8 per cent at $1,113.80 an ounce. In Mumbai, gold prices tracked the global trend with standard gold closing lower at Rs 25,250 per 10 grams on Monday as against Rs 25,770 on Friday and pure gold at Rs 25,400 as against Rs 25,920 per 10 grams.
Gold in Singapore, which normally determines price trend on the domestic front, lost 4.2 per cent to $1,086.18 an ounce, the lowest price since March 2010.