Gold prices have plunged by Rs 1,150 to hit 23-month low of Rs 25,650 per 10 grams in the bullion market.

This is the third-biggest single day decline ever. The largest fall was of Rs 1,250 recorded on April 13 this year.

Bullion traders have attributed the sharp fall in the precious metal’s price to the weak sentiment as gold prices in Singapore plunged to nearly three-year low and fell below USD 1,200 an ounce on improving US economic data strengthening the case for the Federal Reserve to reduce stimulus.

In an exclusive interview with Reema Sharma of Zeebiz.com, Shiv Shrivastava, MD & CEO, IGuru Research, explains the current trends in the gold market, downside risks and investment options.

What are the reasons behind the massive fall in gold prices?

1. US Federal Reserve`s hint to exit from quantitative easing 2. Hope of American economy`s recovery 3. Strengthening of the US dollar 4. Search of a better investment destination

At what range will gold trade in the near term?

In the near term gold will trade in a range of Rs 24,200 and Rs 24,500. RBI in the coming time might take steps to check the volatility in rupee; in such a scenario the gold prices might go down further. In the international market, gold is expected to be around 1180 dollar per ounce which is a crucial support.

Is it wise to invest in gold now for pure investment purpose?

No it is not wise to invest in gold for investment purpose at this level. You must adopt wait and watch policy. Following the hint of exit from quantitative easing by the US Federal Reserve and expectations of a better US economy, gold prices will continue to slide. Moreover the pressure on gold will continue in case the dollar appreciates further.

For more visit: Zeenews.com

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