Oil skids 11.8%; silver at 11-yr low
Gold gives up gains, falls 5 per cent; massive sell-off witnessed on MCX
Gold, silver and crude oil prices hit their respective lower circuits on the Multi Commodity Exchange of India (MCX) as the global equity sell-off amid the coronavirus pandemic created extreme margin pressure on other asset classes, including bullion, metals, and energy. In the international market, silver was down its lowest level after May 2009, while crude oil and metals were around their worst since 2016. Brent crude was down 11.79 per cent and trading at $29.86 per barrel (at 11.53 pm IST).
Silver recorded one of its steepest single-day declines by falling over 13 per cent. Base metals and globally referential agricultural commodities, too, sharply as sellers rushed to liquidate their stocks.
Gold was in green initially but fell in late trading.in the London market, Spot gold dropped as much as 5.1 per cent to $1,451.55 an ounce, reversing earlier gains. The metal lost 8.6 per cent last week, the most since 1983.
“Funds and investment houses had bought a large quantity of silver in the last few months as safe haven asset class. Now, they are coming in to liquidate it, leading to a sharp decline in silver prices globally. The same trend percolated to India as well,” said Gnanasekar Thiagarajan, director, Commtrendz.
The price of silver slumped to trade below $12 an oz in the international market, its lowest level since May 2009. In the Mumbai spot market, traders were reluctant to sell at a low price.
According to the existing guidelines, trading in many commodities were halted after hitting the lower circuits and restarted only after the cooling period.
On the benchmark MCX, the price of silver for delivery in May declined nearly 16 per cent to ~34,139 a kg. Similarly, the gold contract for delivery in April fell 4.18 per cent to ~38,683 per 10 grams. Copper slumped 3.85 per cent to trade at ~405 a kg.
Among agri commodities, castor seed contract for delivery in March plunged 3.91 per cent to ~3,680 a quintal on the National Commodity and Derivatives Exchange (NCDEX).
“Commodities, including bullion, energy, metals and agri products, are facing global selling pressure. The global equity markets have posted a massive sell-off amid fears of a devastating impact of the coronavirus pandemic on the global economy,” said Kishore Narne, associate director, Motilal Oswal Financial Services.
Global commodities, including gold and silver, opened high in early trade on Monday following the US Fed’s decision to cut interest rate to nearly “zero” to help the economy withstand the impact of the pandemic. The 1 per cent decline brought the effective interest to 0-0.25 per cent now. Analysts estimate the rate cut to generate $700 billion in revenues for the US economy.