Spot gold prices drop as traders stay away

Spot gold prices drop as traders stay away

Mumbai: India gold prices fell in the physical market on Monday as traders stayed away from buying expecting a further drop in prices, dealers said.

“Prices are coming down smoothly. Traders are waiting till next week before buying ... the marriage season this time around is not big so they can also use their old stock for business," said a dealer private bank, which deals in bullion.

Traders are expected to stock up for the upcoming wedding season in April.

An unexpected rate hike by India also affected sentiment across markets.

The central bank unexpectedly raised its short-term borrowing and lending rates by 25 basis points each for the first time since it began cutting in 2008, citing intensifying inflationary pressures and a steady economic recovery.

“Rate hike in India surprised everyone all markets are uneasy after the move," said another dealer with a private bank.

Overseas gold was steady in Europe on Monday after Friday’s losses, with the soft euro weighing as fears resurfaced over the debt-laden Greece’s fiscal health ahead of a European Union summit later this week.

Friday’s surprise 25-basis point rate rise from India is also pressuring gold prices, analysts said.