The Hindu Business Line : But the sun shines over bullion markets

However, the spurt in the trade was restricted to gold and silver. Other commodities, both in terms of price and volumes, remained more or less stable throughout the day.

The massive rise in the trading of gold and silver was noticed both by the National Commodity Exchange (NCDEX) and the Multi Commodity Exchange of India Ltd (MCX). Sources said that till 6 p.m., both items were being traded at prices higher than their last closing price.

According to an MCX official, approximately 2,216 kg of gold was traded against the average daily volume of 1,500-1,600 kg. Similarly, for silver, trading was around 30,000 kg against the average daily volume of 20,000-22,000 kg.

It was also learnt that the MCX was hoping to close the day (at 11.15 p.m.) with a total trading of Rs 200 crore against the average trading of Rs 110 crore. (All the figures include buy and sell taken together). Similar highs have been recorded at the NCDEX too.

According to an analyst, worldwide whenever there is a massive fall in the equity market, funds move to commodity markets. So that can be a possible reason behind the rise in bullion trade on Monday.

The NCDEX officials hesitated to accept this view. "We would love to find such a relationship, but it is too early to build such a correlation. Despite the sudden jumps in the market, we still feel that the Indian commodity market is insulated from political and stock market sentiments," one of them said.

Senior members of the Bombay Bullion Association, instead, identified the intra-day rupee-dollar fluctuations as a cause behind the movement in the gold and silver prices, which, in turn, reflect the movements in the Nasdaq and Dow Jones. Trading in the Mumbai bullion market virtually came to a halt during the day due to heavy fluctuation in the Indian rupee value against the American dollar due to domestic political uncertainty. It was also supported by a strong overseas market.

Another interesting aspect was that while both the established commodity exchanges reported huge volumes in gold and silver, trading in the traditional market was low. "Overall, trading volume was low on Monday compared to the past few days' level, as a majority of dealers were adopting a `wait-and-watch' policy. Local prices are moving up due to a firm overseas market and volatility in currency value," a leading bullion dealer said.

Another view was that nobody was willing to take fresh positions and added that gold prices may firm up further. "Most dealers are honouring their old commitments," another dealer said.

In just four days, standard gold prices in Mumbai were up by Rs 105, or 2 per cent, at Rs 5,730 per 10 gm on Monday after the announcement of the Lok Sabha results on May 13. The prices of silver .999 fineness were up Rs 370, or 4 per cent, at Rs 9,480 per kg.

More Stories on : Gold & Silver | Gold & Silver

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page

Stories in this Section
Panic selling reduces Dalal Street to rubble — Erodes Rs 2 lakh cr; Sensex sheds 842 intra-day; trading suspended twice

All in a day's trading

RBI offers liquidity support

Sonia to be PM; likely to take oath tomorrow

Manmohan warns of stern action against 'perpetrators'

Jaswant urges SEBI, RBI to ensure market stability

Red splash across BSE-100

Can domestic FIs do the rescue act?

How circuit breakers cut trading in stock markets

Corporates blame politicians for carnage

Retail investors hit hard; some pick up stocks

But the sun shines over bullion markets

There's something about Monday

SEBI allays fears of payment problems

Nervous market may see TCS delay IPO