Fuel becomes cheaper, but Gold turns costlier.

KOCHI|KOLKATA|PUNE: Britain's vote to exit the EU has made fuels cheaper but cooking oil, gold and silver have turned costlier in a volatile environment, leaving the commodity traders a worried lot, particularly exporters of coffee, tea, basmati rice, seafood, fruits and vegetables.

Gold, a safe investment in turbulent times, rose 6%, while oil slumped 6% before recovering a bit on concerns that demand will wilt as Britain's exit will dent the global economy.

In India, the August contract for gold touched a high of Rs31,925 per 10 gm on the MCX, up by 6.7% from Thursday's closing of Rs29,914 per 10 gm, as high global prices and the weaker rupee made the precious metal costly.

Exporters say a weaker rupee will make the trade more competitive but the fall of the euro and the plunging pound along with the sharp rise in the yen, again a safe-haven currency, has confused and unnerved traders. Praveen Shankar Pandya, chairman of Gem & Jewellery Export Promotion Council, said jewellery exports to the UK may be hit. "It has to be seen whether the UK follows the EU regulation or not. We will also have to see how things pan out in the EU, which contributes more than 10% of our overall exports," he said.

"Gold is expected to remain firm in the coming months not only because of Brexit but also for Fed's decision not to raise interest rate," said Hareesh V, senior analyst, Geofin Comtrade. India's Rs75,000-crore bill for cooking oil imports can rise.

Tea traders are worried about demand from the UK, a major consumer, while coffee exporters face other challenges. "We have been facing problems due to recession in countries like Greece, Portugal and Spain. Brexit could cause further turmoil," said Ramesh Rajah, president of Coffee Exporters Association of India.

Source : economictimes.indiatimes.com