Both the precious metals suffered a reverse on the Mumbai bullion market last week. The decline in gold was partly attributed to the weaker overseas advices and partly due to heavy arrivals in South India. At the same time with the start of the 'Shradha Praksha' the demand had dropped in both the metals.
Despite the festival season ahead traders were uninterested in keeping stocks on two counts. First, uncertain overseas advices and second the likely announcement of liberalised gold import policy by the Union government which had been under discussion by various authorities. The Reserve Bank of India had been favourably inclined to allow more imports of gold. At the same time, the excise department had not raised objections to liberalise the imports as the move would stop smuggling to a large extent.
Overseas advices were discouraging. Gold prices abroad had dropped to $320.50 per ounce. Silver was also unable to cross $4.80 mark and had declined to $4.63-65 per ounce, presently.
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Thus the sentiment had been still bearish as the investment buying was at a low ebb. Meanwhile, reports from South indicated heavy inflow of gold as well as jewellery by passengers arriving there. Within the last two days of the week, the inflow in South had been estimated at around 750 kgs. At the same time pressure of selling of gold instruments had been heavy and most of the shops had to suspend fresh purchases due to heavy stock position. Consequently, prices at important centres in South have been ruling at Rs 1,000 lower than in the city.
In view of the very good crop position, particularly in Rajasthan, and Madhya Pradesh, heavy demand for silver had already been reported from these areas. After a fortnight the demand for the festival season would start and would continue till June-end as marriages would start after 'Dev Diwali' day.
Standard mint gold commenced last week steady at Rs 4,450 and on increased offerings the opening rate became the high of the day. On lower overseas advices and heavy inflow from South, values dropped to end the week at a low of Rs 4,390 per 10 gms. Gold 22 carat fluctuated between Rs 4,115 and Rs 4,060. Gold bar, 10 tolas, dropped from Rs 52,200 to Rs 51,500.
In silver, ready silver .999 fineness commenced last week steady at Rs 6,865, to touch last week's high of Rs 6875 and on overseas advices dropped below to Rs 6, 865 to close at Rs 6,820 per kg. Silver .916 moved between Rs 6,775 and Rs 6705 per kg. Tenderable silver, over the week , lost Rs 45 at Rs 6,825 per kg.
Oilseeds: An easier trend prevailed in groundnut oil trading in Mumbai last week. The activity in castorseed futures and spot section was limited. With the crop prospects in Gujarat bright, groundnut oil prices were on the decline while hopes of good castorseed arresting the rising trend in prices.
The bumper soyabean crop in Madhya Pradesh and the fresh inflow of soyabean also had a dampening effect on oil and oilseed cakes prices in most varieties. With the prospects of the new crop, estimated to be around 22 lakh tonnes, sellers were active and the demand sluggish because of cheaper imported oils available. Besides, in view of good crop prospects farmers were marketing old groundnut stocks. Supplies of new crop could be expected by September-end .Rajkot oil advices were weak with Rajkot tin declining from Rs 562 to Rs 532. Consequently, supplies of groundnut has gone up to 90-100 tonnes a day, resulting in prices dropping from Rs 346 to Rs 330 per 10 kg. Sellers, however, were keen on liquidating stocks as October and November delivery stocks were concluded around Rs 320 per kg. With the rise in excise duty by 3 per cent and higher Malaysian palm oil advices palmoline ruled better at Rs 264 from Rs 254.
According to trade, sellers were reserved at lower rates. Malaysian traders were demanding higher prices in view of the likely fresh tender for purchases by the State Trading Corporation.
Activity in castorseed futures was thin with price fluctuations in a narrow range. In view of larger crop prospects, the sentiment has been uncertain as expectations of new crop supplies were high in December and tenders would be fairly large. Indian castor oil lacked good demand in world markets at current levels.
Castorseed September lacked trading activity. The December delivery commenced at Rs 1,168, against the previous close of Rs 1,165 and in restricted activity it touched a high of Rs 1,170. The lack of fresh follow up support adversely affected sentiment and prices declined to a low of Rs 1,164 to end at Rs 1,165 per quintal. Ready castorseed Madras small ruled at Rs 1,190 and castor oil commercial commenced at Rs 268.
Grains: A firm tendency in some pulses was the highlight of trading on the Mumbai grain market last week. With the imposition of 3 per cent levy on imports, these pulses are expected to cost more. Pulses are allowed as free imports under Open General Licence system and only due to imports, prices of pulses had been under check over the last several years. Now the imports would depend on the prices here and the margins available, or in the absence of margins fresh import would show a substantial fall.
On the other hand, the Union government had decided to allow exports of coarse grains to the extent of 50,000 tonnes. The exports of wheat and wheat products had been banned due to short supplies and depletion of stocks with the Union government. On the other hand, imports of wheat has been permitted. Wheat, rice and coarse grains ruled steady. However, in coarse grains, exporters were active with commitments. Consequently, the undertone in coarse grains was better. Wheat Punjab moist inferior was offered steady at Rs. 630-650 and Ganganagar variety at Rs 700-750 per quintal.