Gold comes crashing down; drops to 2 and half year low

Updated: Friday, June 21, 2013, 11:49 [IST]

International gold prices came crashing down in trade on fears that the withdrawal of quantitative easing in the US would see lower prices for the metal. Spot gold in the international market was down to $1281 an ounce, a level last seen in Oct 2010. Check gold rates in India here

Indian gold prices follow international trends since India imports all its gold requirements. Fall in international prices of gold reflect in the Indian markets, provided the rupee rate against the dollar remains stable.

Indian gold prices have not fallen in line with international prices, largely due to a sharp depreciation in the rupee. Indian spot gold was around Rs 25,200-Rs 26,000, but, should correct when markets open today. Gold prices in India have now corrected from Rs 32,000 per 10 grams to the current levels.

The US Federal Reserve on Wednesday hinted at a systematic withdrawal of its asset buying programme, beginning by the end of the year. In the last few years the Fed's asset buying has ensured ample liquidity in the global financial system, which has pushed asset prices, including gold prices higher.

Analysts are hopeful that gains in the Indian rupee against the dollar would make gold prices cheaper in India once again.

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