Investors are staying away from the market due to the recent volatility in gold prices.
The turnover and volumes of two precious metals, gold and silver, have been moving in opposite directions, despite their prices moving southwards at the same time.
Both hit a recent high on the same day, September 5. Gold hit Rs 28,485 per 10g and silver went up to Rs 66,395 per kg on the Multi Commodity Exchange (MCX).
However, since then, gold prices have slipped, to Rs 26,095 per 10g on September 28. Silver prices are down to Rs 51,857 a kg.
However, there is a sharp difference in their turnovers and volumes. That for gold has seen a sharp decline on the MCX, falling to Rs 20,184 crore on September 28 from a high of Rs 44,542 crore on September 6. Even volumes have slipped sharply, from 157,361 kg to 77,313 kg on September 28. (These figures do not include Saturday turnovers and volume figures. Trades are extremely low on Saturdays because international markets are closed and trades only take place electronically).
Experts said investors have stayed away from the market due to the recent volatility in gold prices, adversely impacting volumes and turnover. Gold has also suffered because in the past couple of weeks, investors have been buying dollars, preferring to sit on cash.
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The silver story, on the other hand, is the reverse. Both turnover and volumes have risen, implying that more investors have shown interest in the commodity after the recent fall in its prices. The turnover for silver on the MCX has risen to a high of Rs 24,779 crore. Even the volumes have been higher, with the white metal hitting a volume of 4.2 million kg on September 23.
“After falling sharply, the rupee has appreciated marginally and, at the same time, silver was correcting. This helped volumes to rise in the futures market. The trend from here for silver could be bullish,” said Reena Walia Nair, senior analyst, Angel Commodities. In the past week, the rupee has appreciated by 0.9 per cent.
“Investors resorted to selling their holdings in gold despite it being a safe haven option, as investors wanted to cover the losses they made in the equity markets,” added Nair.