Gold at 3-week low, but firms take it off shelf

Gold prices in the Mumbai bullion market fell to a three-week low of Rs 26,895 per 10 gm on heavy speculative selling on Friday. Several banks and financial services companies have stopped or reduced the sale of gold in line with an RBI directive. HT reports.

Gold prices in the Mumbai bullion market fell to a three-week low of Rs 26,895 per 10 gm on heavy speculative selling on Friday.

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In an unrelated development, several banks and financial services companies have stopped or reduced the sale of gold in line with an RBI directive.

Reliance Capital, an ADAG company, on Friday announced the suspension of the sale of gold in physical form and as an investment product to curb the demand of the yellow metal.

"We hope all stakeholders across business, trade and industry will act in a responsible manner to minimise gold imports," said Sam Ghosh, CEO, Reliance Capital.

Fears that rising gold (and other) imports could push CAD (the difference between dollar imports and dollar exports) out of control have, among other things, kept RBI from cutting rates, which many see as a necessary precondition for reviving the economy.

Finance minister P Chidambaram has also urged Indians to resist the temptation of buying gold.

Most banks said they will stop selling gold once they exhaust their existing stocks.

"Gold consumption, which is being discouraged by the government due to the yawning CAD, is tapering off and there will be a further correction prices in the coming weeks," said Soumya Kanti Ghosh, chief economic adviser, State Bank of India.