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Volumes in futures exchanges recorded a sharp fall on Monday. On Multi Commodity Exchange (MCX), against an average daily volume of Rs 16,977 crore a session in the last week, volumes on Monday stood at Rs 11,650 crore, a fall of 30 per cent. Of this, a fall of Rs 4,112 crore was accounted for by precious metals, lead by gold.
On National Commodity & Derivatives Exchange (NCDEX), which mostly trades agri commodities, volumes stood at Rs 3,560 crore, 15 per cent lower than last week’s average. However, the volumes were in line with the average since July. Ajay Kedia, director of Kedia Commodities, said, “On MCX, volumes have been lower due to the expiry of the August gold contract that haven’t been rolled over. Also, small investors have been keeping away due to the NSEL (National Spot Exchange Limited) crisis.”
For the August contract, bears were trapped, as prices started rising and they weren’t in a position to make good on deliveries because, following an announcement by the Reserve Bank of India, there was acute shortage of gold in the domestic market. As a result, premiums on the August contract rose by Rs 500-600/10g, and this was reflected in the spot market, too. The premiums mean the market price is higher than the landed cost of gold imports. Because premiums were higher on the day of the contract expiry, traders and investors were waiting for new contract price to get a glimpse of the real picture before taking any bets.
On MCX, the largest exchange for gold trading, October futures were trading at a discount of about Rs 550/10 g to the August contract in the evening session. In the morning, the discount was Rs 350-400. When the spot market opens on Tuesday, discounts in the October contract may be reflected.
