The All India Sarafa Association (AISA), an umbrella body for bullion traders, has written to the prime minister and finance minister seeking a ban in futures trading of gold and silver.
"Sudden rise and fall in the prices of gold and silver, many times in a day, has created instability in the minds of consumers and adversely affected the bullion trade," the traders' body President Sheel Chand Jain said.
Echoing his view, Delhi Grain Merchant Association President Om Prakash Jain said that a few companies control the price movement in forward trading and they were responsible for the artificial rise or decline in commodity prices including that of sugar.
Commodity market analysts, however, are of the view that a ban in these commodities would not help control volatility as prices are determined by fundamentals and international factors such as forex and crude oil prices.
"Speculation is not the only reason for the price movement of the sweetener. It can affect only up to five per cent of the movement, not beyond that. The price movement mainly depends on demand and supply situation in the country," Karvy Comtrade's G Harish said.
The government suspended futures trading in soya oil, potato, rubber, chana (gram) on Thursday, while rice, wheat, urad and tur was banned early last year.
However, another industry association, All India Gems and Jewellery Trade Federation's Chairman Ashok Minawala said that the volatility might not be avoided by a ban on futures trading.
"The volatility in the prices of gold and silver cannot be avoided. I don't see any reason for banning the precious metals as we cannot control the international prices," he said.
"The gold and silver prices are fixed by London Bullion Market Association and is traded not only in India but across the globe. So banning their trading in the futures market is illogical and cannot stop the market volatility," said Karvy's Harish.
However, a Delhi-based retailer, Mahesh Verma pointed out that the price fluctuation is so much that it becomes very difficult to make any anticipation. "The transaction is heavy, even decrease in a small amount makes big difference for local traders," he added.
