Gold slumps to 11-month low of Rs 27,550/10 g on weak demand

Gold prices slumped by Rs 250 to hit over 11-month low of Rs 27,550 per 10 gram at the bullion market here today due to weak demand from jewellers and lower advices from futures trade.

Silver also fell by Rs 210 to Rs 38,600 per kg on reduced offtake by industrial units and coin makers.

Traders said persistent fall in demand from jewellers and retailers in view of prevailing cash crunch largely weighed on gold prices.

The government on November 8 had scrapped old series Rs 500 and Rs 1,000 notes to flush out black money, leading to a cash crunch in the market.

Also, investors were clueless about future trends as major world markets such as Singapore, which rule price trends in local markets largely, were closed for holiday.

Meanwhile, gold in futures continue to trade below the 27,000 level in afternoon. The February contract of the metal fell to a low of Rs 26,916 per gram on MCX commodity exchange. It was trading lower by Rs 14 at Rs 26,980.00 per 10 gram in afternoon trade.

In the local spot market, gold of 99.9 per cent purity plunged by Rs 250 to Rs 27,550 per 10 gram -- a level not seen since February 4 when it had closed at Rs 27,575 per 10 gram. Gold of 99.5 per cent purity too plunged by Rs 250 to Rs 27,400 per 10 grams.

The precious metal had lost Rs 150 in the previous three days.

Sovereign, traded lower by Rs 100 to Rs 23,900 per piece of eight grams.

In tandem with gold, silver ready also lost Rs 210 to Rs 38,600 per kg and weekly-based delivery by Rs 460 to Rs 38,465 per kg.

On the other hand, silver coins remained flat at Rs 70,000 for buying and Rs 71,000 for selling of 100 pieces in scattered deals.