Zee Media Bureau
Gold prices fell below Rs 26,000 per ten grams level in futures trade Friday as the Reserve Bank today scrapped the controversial 80:20 scheme, a move which the industry believes will further bring down prices of the precious metal.
Speculators also offloaded their positions in tandem with a weak trend overseas.
At the Multi Commodity Exchange (MCX), gold for delivery in December lost Rs 357, to Rs 25, 890 10 grams.
Under the 80:20 norm, put in place in August 2013 to curb high gold inflows that was widening the current account deficit, at least 20 percent of the imported gold had to be mandatorily exported before bringing in new lots.
The surprise move comes a time when the industry was actually expecting more curbs imports of gold which is seen as an unproductive asset attracting household savings away from the financial markets.
Market analysts said the fall in gold futures was mostly due to a weakening trend in the global market as crude oil at the lowest level in four years increased prospects for a cooling of consumer prices, reducing demand for an inflation hedge.
Gold in international markets fell today on the back of a slump in oil prices, with strength in the dollar piling further pressure on the metal ahead of a referendum on the management of Swiss bullion reserves this weekend.
Oil prices posted their sharpest losses since 2011 on Thursday after OPEC refrained from cutting its output following a more than 30 percent plunge in prices since June. Oil steadied on Friday, but remained under pressure.
Spot gold was down 0.6 percent at USD 1,184.44 an ounce, while US gold futures for December delivery were down USD 13.10 an ounce at USD 1,183.50.
Meanwhile, gold prices weakened by Rs 110 to Rs 26,670 per ten gram at Delhi bullion market, tracking a weakening global trend.
Silver also remained under selling pressure and traded lower by Rs 550 to Rs 36,200 per kg.
With Agency Inputs
