Gold flash crash sends prices down about ₹2,000 in just two days: 5 points

Gold prices in India fell below ₹46,000 per 10 gram (REUTERS) — Gold prices in India fell below ₹46,000 per 10 gram **(REUTERS)**

2 min read . Updated: 10 Aug 2021, 02:13 PM IST Livemint

Gold rates slumped 4% in just two days while other precious metals like silver also fell sharply

Gold and silver rates crashed in the previous two sessions in futures market in India, tracking a global selloff in precious metals. Gold fell around ₹1,800 per 10 gram in just two days while silver slumped over ₹4,000 per kg, before seeing some recovery today. On MCX, gold futures were up 0.3% to ₹46053 per 10 gram after hitting a 4-month low of ₹45,800 in the previous session. Silver futures were trading 0.6% higher at ₹63015 per kg, recovering from lows of ₹62,300 in the previous session.

MCX gold could fall towards 45700 – 45650 if prices break below the support of previous session placed at ₹45815, says CapitalVia Investment Advisor.

Here are five things to know about flash crash in gold:

In global markets, gold prices fell more than 4% in the last two sessions after better-than-expected U.S. jobs figures bolstered expectations for an early tapering of the Federal Reserve's economic support measures. In global markets, gold today recovered slightly to $1731.57, after a flash crash in past two sessions due to strengthening US Dollar index and also U.S. Treasury yields.

Gold is typically viewed as a hedge against higher inflation but a Fed rate hike would dull its appeal as it increases the opportunity cost of holding the non-yielding metal. Also, a stronger dollar makes gold more expensive to holders of other currencies.

However, rising virus cases and increased geopolitical tensions have lent some downside support to gold, says Ravindra Rao, Head Commodity Research at Kotak Securities.

ETF outflows also show weaker investor interest amid continuing firmness in equities. The holdings of SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, fell 0.2% to 1,023.54 tonnes on Monday from 1,025.28 tonnes on Friday.

"Rising inflation in some countries may force their respective central bank to tighten monetary policy, raise rates. Going forward, the way countries control the spread of new variants of the virus, recovery in the global economy, the pace at which global central banks unwind their easy monetary policy regime will guide gold prices," said Nish Bhatt, Founder & CEO, Millwood Kane International.

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