MCX gold delivery attains year's high as supply eases.

​MUMBAI: RBI's policy of re-allowing star and premier trading houses to import gold in addition to banks and nominated public sector units has driven up deliveries on the country's largest commodity bourse MCX to a yearly high of 1.1 tonne, worth around Rs 279 crore.

Many bullion dealers, who were allowed to import gold for local sales, subject to prior export of 20 per cent of a consignment, are learnt to have given and taken delivery on the bourse, said a few bullion dealers, resulting in delivery of 1.1 tonne of gold in the contract that expired on August 5.

The reason for the jump in delivery to a yearly high, said Javed Malpura, head commodities, Quant Commodities, and Sudheesh Nambiath, senior analyst with precious metals research firm GFMS Thomson Reuters, was the sharp reduction in spot market premiums since May 21 when RBI reallowed trading houses to import the metal under 80:20 scheme. Some of these trading houses include Edelweiss, Rajesh Exports and RiddiSiddhi Bullions.

A year ago, alarmed by a widening current account deficit, RBI curbed gold imports by raising import duty to 10 per cent and permitting only a few banks and PSUs like MMTC and PEC to import under 80:20.

In May this year, the central bank eased the supply restrictions by lifting the import curbs on trading houses after CAD narrowed and industry complained of an acute shortage in gold supply.

Prior to May 21, premiums charged by banks and other nominated agencies rose as supplies dried up. The high premiums pushed spot gold above the futures rate, inverting the market — spot gold traded higher than gold futures.

However, once the supply eased amid traditionally low demand in June-July, premiums declined to as little as $1-2 an ounce (32 gms) from $25 before May 21. This corrected the skew in the market and once again resulted in futures trading at a premium to spot rate.

According to industry, India imported around 207 tonnes of gold during April-June, up 60 per cent from official imports of 128.8 tonnes according to World Gold Council.

According to Vasu Acharya, MD, Parker Bullion, the spot rate in Ahmedabad was around Rs 100 per 10 gm lower than the closing rate of Rs 27915 on MCX on August 5, when 722 kilos were delivered. However, Acharya said that rather than consumption demand for gold jewellery, investment demand, for bars, had picked up following RBI's move.

Source : economictimes.indiatimes.com