Mumbai, Jan 16: The MCX February gold contract is quoting Rs 510, or 1.8 per cent, lower than the spot market in Mumbai’s Zaveri Bazaar’s Friday closing price of Rs 28,890 per 10 gm on expectations of an import duty cut.
Futures prices are usually higher than spot prices because these include a cost for carrying forward positions, but the market is expecting the government will lower the import duty on gold.
The April contract is trading even lower than the February price.With declining imports and a virtual collapse of the black economy, the government might bring the gold duty structure in line with the proposed 4-6 per cent goods and services tax rate for precious metals, a trader said.
He added a duty cut would also deal a blow to smuggling.Arbitrage traders, especially those who have ready bullion, prefer to sell in the spot market now and buy futures. When futures used to fetch a premium, they bought in the spot market and sold on the MCX.
Sourec: indialivetoday.com