Commodity brokers worry as clients' bets go wrong in opening

Gold up over 5%, oil down 6% as Brexit trends show 'Leave' vote ahead

Shock was the overriding sentiment in commodity markets on Friday as the Brexit voting trends became clearer.

Brokers and clients remained in panic after commodities opened on the MCX as gold hit a higher circuit of 6% in opening trade. Globally, the metal’s prices crossed $1362 an ounce on Brexit looking likely.  However, soon after it opened, for a brief 15 minutes, it hit upper circuit again. 

Summing up what was going on, Andrew Coke, principal metal analyst at London based Metal Bulletin Research said "Financial markets were pricing in a Remain victory, so the Brexit outcome is a shock."

"In early trade today though, amid the rush to safe havens, the base metals have suffered less of a hit than other markets, so far at least. Where they go after the initial volatility depends on what we get in the way of damage limitation from politicians and policymakers not just in the UK and Europe, but elsewhere.," he added. 

Silver was trading higher over 4% in opening trade. Meanwhile, crude and metals were down between 2 and 5%.

Ajay Kedia, director Kedia Commodities said, "Now positions that went wrong are getting squared off due to mark to margin pressure and in following hours if the trend seen in early trade persists, volatility of commodity will spread in agri segment to pay margins in non-agri and may spread to other segments like currencies as well." 

Gold international has now cooled to $1330, but on MCX it was up 6% in circuit at Rs 31,708 per 10 gram, while silver was up 3.4% at Rs 42,575 per kg.

Crude was down 3.6% while metals were down 2-3.5% on the exchange. On the MCX on Thursday night, gold closed Rs 29,914 per 10 gram and silver closed Rs 41,190 per kg. 

SEBI officials said they have already asked their exchanges to remain alert and put its own surveillance mechanism on high alert to handle any unforeseen eventualities.