Gold and silver prices tumbled for a second day in a row on Monday, leading to panic selling by brokers as margins were triggered.
The contagion effect of the fall was seen in other commodities, natural gas and crude oil.
On the MCX, gold and silver prices were locked in the lower circuit. In Mumbai’s Zaveri Bazaar, the yellow metal fell by Rs 1,330 (4.8 per cent) per 10g, whereas silver lost Rs 3,615 (7.1 per cent) to close at Rs 46,990 per kg.
In India, gold hit a 19-month low and silver hit a 26-month low.
The volume on MCX till 10 pm was at a record high of Rs 1,18,000 crore. Gold was at Rs 25,730 and silver at Rs 44,150 on the bourse at 10 pm.
“Gold has transformed into a sell-on-rise from a buy-on-dips market,” said Sugandha Sachdeva, in-charge-metals, energy & currency research, Religare Broking.
Most commodities fell sharply due to panic selling by traders, she added. Margin and stop-loss-related selling triggered a panic in the market.
What hurt sentiment further was China’s lower-than-expected economic growth data. China’s National Bureau of Statistics said in Beijing on Monday the economy grew at 7.7 per cent in the March quarter, against 7.9 per cent in the December quarter.
Analysts were expecting eight per cent growth.
While markets fear that Cyprus might part with its 13.9-tonne gold reserves to repay debt, the major worry was if other troubled European nations would also resort to such selling.
This could lead to a crash in the market. Italy (2,452 tonnes), Spain (281.6 tonnes), Portugal (382 tonnes), Ireland (6 tonnes) and Greece (112 tonnes) hold substantial gold reserves.
In the Indian market, many MCX traders faced margin calls as stop-losses were triggered, leading to a further fall in these commodities’