After Akshaya Tritiya, gold traders have became bearish. Trading in MCX futures in gold also reflects this as the open interest on the exchange has reached highest since April. While open interest can be of both side bets, brokers say most players are bearish in gold.
Open interest in gold used to be 15,000-16,000 lots from early April. But on Thursday, open interest was 18,812 lots, which is highest this financial year. Yesterday, however, it fell to 18,675 on profit taking. Open interest has been on the rise with a rise in volumes.
In the last one week, gold on MCX has fallen 4.3 per cent to Rs 25, 835 per 10g.
Ashok Mittal, chief executive officer, Emkay Commotrade, said: "Most traders have taken bearish view on gold as prices are expected to fall in the coming weeks. This has also been reflected in shrinking spreads in two contracts."
The spread between near month, which is June contract, and far month, which is August contract, on MCX has shrunk to Rs 130, which was Rs 500 per 10 gram in early April. Mittal expects gold price to move to Rs 25,000 in June contract, while for silver, the support is Rs 42,000, and if that is broken, price could go below Rs 40,000.
At present, June contract gold is trading at Rs 25,820 per 10 g, while silver is Rs 42,634 a kg.
Gold in the Mumbai spot market is also quoting at a premium Gold price in the last one week in the Mumbai spot market has fallen 4.36 per cent or Rs 1,190 to close on Saturday at Rs 26,120 per 10 g, while silver has fallen 4.98 per cent to Rs 43,800 a kg.
However, compared to MCX June contract, spot gold in Mumbai is at a premium of Rs 285 per 10g.