Gold slumps after FBI clears Clinton in email probe

MCX far month futures trades at discount on Duty cut buzz

Gold prices fell sharply in Mumbai on Monday in spot and futures markets following reports that US presidential candidate Hillary Clinton might not face criminal charges related to her use of a private email server, boosting her chances of winning the election. 

While gold futures on the Multi Commodity Exchange (MCX) saw an uptick in open interest, February futures were quoted at a discount to December futures, reflecting the possibility of a reduction in import duty by two per cent in the near future. 

“While discount in far-month (February) futures narrowed, overall prices fell sharply and fresh short positions were built in near-month (December) futures,” said a derivative trader. On MCX, the overall open interest increased from 9,479 lots on October 28 to 10,291 lots on Monday. The increase represents higher sale side positions as chances of Clinton’s victory in the US election improved, which means stability and continuation of policies. 

Gold futures in February contract was quoting Rs 125 premium a month ago compared to December contract, which went into a discount of Rs 83 for 10 gram on October 28. On Monday, the discount narrowed to Rs 21 as prices in the day session for December contract closed Rs 319 lower at Rs 30,229, while February contract closed at Rs 30,208. Usually, far-month contract trades at a premium thanks to the cost of carrying positions for longer term. 

In Mumbai’s Zaveri Bazar, the spot market standard gold prices closed Rs 235 lower at Rs 30,425 for 10 gram. Silver price fell to Rs 43,830 for 1 kg. Discount in market was $3 per ounce on Friday which narrowed to $1,5 today as per NCDEX data.

Spot gold was down 1.5 per cent at $1,284.56 an ounce, after hitting a low of $1,283.12 earlier in the session. US gold futures fell 1.5 per cent to $1,285.1. Globally, support for gold was found at $1,278, which is its 200-day moving average. 

There was a buzz in the market that import duty might be cut by two per cent as the government announced the sixth tranche gold bond issue at Rs 50 discount to the formula-based market price. The bond issue closed last week, but the issue date is fixed on November 17.