Bullion punters see rupee remaining stable or strengthening in coming weeks and may remain so till atleast one to three months. Indications for this were available from over 1% discounts in gold futures in far month futures on the Multi Commodity Exchange (MCX) today.
October Futures which is expiring on MCX on 5th October was quoted at Rs 30, 055 per 10 gram and December futures was trading at Rs 29, 725 or at a discount of Rs. 330 per 10 gram. In Mumbai's spot market gold today closed Rs 160 higher at Rs 29,980 per 10 gram.
"This is a currency play, traders are expecting that till next US Fed actually announce tapering off of bond buying program dollar will remain weak which means rupee will strengthen or remain stable," said Naveen Mathur, Associate Director - Commodities and Currencies, Angel Broking. Next meeting of the US Fed is scheduled in October end when the Fed may cut bond buying or may differ it to December.
With gold prices in international market remaining stable for past few days and rupee also stable with a bias to rise, punters seems to have gone long in gold.
Another reason for current month premium remaining higher is higher premium in spot market for physical delivery. A trader sad that spot prices are quoted at a premium of Rs 500 per 10 gram as still physical delivery is not available as per demand and smuggled gold is selling at landed cost of official imports or at Rs 450-500 discount to spot prices.
Imports have began in a small way and after last week's clarifications some imported consignments have been released by the customs and more stock will enter in Mumbai market in coming days. Even banks are beginning to import gold which should put premium under check in coming days.