Gold prices tank 3% to Rs 50,000 on profit booking, vaccine hopes

NEW DELHI: Gold and silver tanked in early trade on Wednesday, thanks to a massive bout of profit booking after a steep rally even as COVID-19 rampages throughout India, disrupting lives.

Hopes of vaccine development too prompted some investors to reduce exposure to safe-haven assets.

India has reported over 23 lakh coronavirus cases by now with more than 46,000 deaths. Gold tends to gain when interest rates are low and political and economic uncertainties are high, and vice versa.

Gold futures on MCX were down 3.10 per cent or Rs 1,608 at Rs 50,321 per 10 grams. The counter slid to a low of Rs 49,955 during the day. Silver futures tanked 7.74 per cent or Rs 5,178 to Rs 61,756 per kg.



“It is the right time for profit booking in gold and silver. The trend of bullion is still positive, but traders should adopt a cautious approach while taking any position at these higher levels. We expect some profit booking in gold and silver as in the physical market people are selling their ornaments and bars to take advantage of higher levels,” said Anuj Gupta, DVP- Commodities and Currencies Research, Angel Broking.

Gold prices in the national capital declined Rs 1,317 to Rs 54,763 per 10 grams on Tuesday in line with a drop in international prices of the precious metal and a rupee appreciation, according to HDFC Securities. Silver also declined Rs 2,943 to Rs 73,600 per kg

Globally, gold clawed back some lost ground on Wednesday, after sinking 6 per cent in the previous session, as equities stalled on doubts over an additional round of U.S. fiscal stimulus and rising Sino-U.S. tensions.

Spot gold was up 0.5 per cent at $1,920.04 per ounce by 0045 GMT, having suffered its largest one-day drop in more than seven years on Tuesday due to a bounce in risk appetite and a firmer dollar. US gold futures fell 0.7 per cent to $1,930.70.

The dollar index held steady against a basket of major currencies.

SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, said its holdings fell 0.3 per cent to 1,257.93 tonnes on Tuesday.

Silver rose 1.6 per cent to $25.18 per ounce, platinum gained 0.5 per cent to $934.52 and palladium was steady at $2,091.59.