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With Akshaya Tritiya related demand for gold ending and the country’s central bank announcing measures to restrict import of gold on consignment bases, traders have became bearish on outlook for demand and price.
Spread between June and August MCX gold contracts was Rs.503 in beginning of april which was little less than 2 per cent which fell to just 1% or Rs.256 a day before Akshaya Tritiya. However after Akshaya Tritiya the spread fell to around half per cent and today it is Rs.140, which is perhaps historic low. Narrowing spreads of gold futures between two contracts reflects that traders are not enthusiastic in near future about gold outlook.
“Gold was never looking so bearish,” said an Indian analyst with a foreign research house. He said that traders expect $100 per ounce fall in gold prices in coming months.
While in January the spread was as high as Rs.700 few days prior to 2 per cent import duty increase on gold which was announced in end of January. However that was also exceptional.
CP Krishnan, Whole Time Director, Geojit Comtrade said, “Falling spread in futures indicate that traders are bearish on gold prices going forward. After Akshaya Tritiya demand over and government looking determined to curb demand for the yellow metal traders have became bearish.”
He said that fall in gold prices internationally in last couple of days was also because India’s demand is expected to fall. India imports between 900-1000 tones of gold every year since last few years.
On Monday the RBI asked banks that import of gold on consignment bases is not allowed unless it is meant for meeting genuine requirement of exporters. This is expected to result in at least 10 per cent fall in demand for gold. Traders are saying after Akshaya Tritiya gold demand will fall from June as it is lean month for gold buying. Even gold price which fell Rs.300 on Monday that is akshaya tritiya day has further fallen today by Rs 270 per 10 gram to Rs 26,760 per 10 gms. Silver has also fallen today by Rs 715 per kg to close at Rs 44,695 per kgs in Mumbai market.
Meanwhile PTI adds from new delhi - Gold today witnessed its second biggest loss this year of Rs 600 to Rs 27,300 per 10 grams due to reduced offtake amid weak global trend. Silver prices followed suit and dropped by a massive Rs 800 to Rs 44,700 per kg on reduced offtake by jewellers and industrial units. Traders said hectic selling by stockists on the back of sluggish demand at prevailing higher levels and a steep fall in global markets, mainly pulled down both gold and silver prices. This is gold 's second biggest fall this year since since April 15, when it had plunged by Rs 1,160 to Rs 26,640 per 10 grams.
