Silver drops by Rs 1,500; gold also declines on panic selling

Panic selling across asset classes on Tuesday did not leave precious metal counters untouched as silver lost Rs 1,500 in the domestic spot market from its all-time high level and gold declined by Rs 230.
After gaining Rs 300 on Monday to Rs 54,600 per kg, silver dropped to Rs 53,100 on Tuesday. Gold too declined to Rs 21, 080 per 10 gm.
In the international market gold dropped below $1,400 per ounce and was trading around $1,397- 1,398. From Monday’s intra-day high of $36.45 per ounce silver stooped to $34 levels. The metal had closed $35.87 on Monday.
At the Multi Commodity Exchange too, near-month contract in silver declined from Rs 53,974 to Rs 51,920 per kg.
The panic selling triggered by the Japanese calamity was visible across asset classes. While the Indian equity market fell around 1.5 per cent, most of the Asian stock markets, including those in Japan, China and Hong Kong witnessed losses.
“The commodity counters initially reacted positively to the Japanese calamity. Gold, which has been seeing some corrections of late, rose on Friday and Monday. But the enormity of the disaster has created a panic in the market and in gold too there would have been profit booking to compensate the margin shortfalls,” said Harish Galipelli, head, research, JRG Wealth Management.
Gold, which usually gains from the downside in the equity counter, has reacted similar to the stocks during panic situations in the past. In October 2008, when the global recession had hit the equity markets, gold too fell.
“The recovery depends upon the level of dynamics in a particular asset class. While precious metals may see extended correction in the short-term, reconstruction activities in Japan is expected to lift the commodities thereafter,” he said.

(Source: http://www.mydigitalfc.com/commodities/silver-drops-rs-1500-gold-also-declines-panic-selling-665)