Globally Gold fell to a seven-month as speculation that borrowing costs will rise in the United States ahead of schedule fortified the dollar, eroding the demand for precious metals as an alternative investment.
But buyers on domestic market may be missing out the softening of gold metal prices in the international marketplace through a weaker rupee, but bettors are on the rise bearish bets on the metal on the Exchange of local raw materials to gain downward.
Futures contracts of gold and silver in the Multi Commodity Exchange (MCX) witnessed a sharp jump in the bearish bets as the yellow metal in the overseas market, the monitoring of local markets, to a maximum of nine months fell low fence and silver fell to under 15 months. But unlike in the overseas market, both gold and silver futures MCX traded beyond their minimum due to a weaker position of rupee versus dollar.
Dollar index cash up to a maximum of 14 months, as traders increased bets that the Fed upload the borrowing costs in July 2015 after holding near zero since 2008 gold plummeted 28 percent the year past expectations that the central bank will reduce monthly purchases of assets, which it has done six times.
However, spot gold overseas made a nine months and silver fell to a 15-month low on expectations of a stronger US dollar in intraday trading Thursday. But gold MCX at Rs 27,026 per 10 gm is trading 4.5 percent above its low of 6 June and 4.6 percent silver above its minimum on 5 May this year. This is due to high India gold import duty (10 percent) and a weaker position of rupee versus dollar. The rupee, which closed at 60.93 per dollar on Thursday, was higher at 59.18 on June 6, when the near-month gold futures contract made its low for the year to date. On May 30, when the silver contract months near came to a year-to-date low, the rupee was at 59.10 per dollar.
A stronger US dollar and higher government bond yields have been a problem for gold all week, and remain a headwind in the future market. 100 MCX Tips Technically experts speaking, “if COMEX Gold breaks the $ 1,240 level then it may test the levels of $ 1,220 and $ 1,200 to the downside. If MCX October Gold futures at 27.100 level breaks then the movement may be seen that levels of 26,900 and 26,700.”
The bearish bets on gold, measured by open interest (OI) or outstanding buy and sell positions within the near month contract jumped out to 11,032 units from 10,439 on Thursday intraday contracts a day ago. The majority of these downward bets is because the OI has been lifted amid a decline of three-fifths in the contract price to Rs 27,026 per 10 gm.
A leap into OI accompanied by lower in average prices traders are betting prices will will go further down and being sold short the metal. If the lower price, they pocket the difference. Similarly, the silver contract witnessed an addition to OI of 1,446 to 12,183 units since yesterday as the price underwater by 1.3 per cent to Rs 41,420 per kg in intraday trading.
“We are downward on gold and silver, as an improbable shift in the geopolitical developments, the better sentiment of the overall investors have flocked to asset classes such as equities, which have surpassed commodities.” 100MCXTips experts says.
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