With the stock market in turmoil, small investors have been increasingly shifting their attention towards gold. The Multi-Commodity Exchange of India (MCX), which launched its first-ever gold guinea futures contract on the festive occassion of Akshaya Tritiya in May is witnessing hectic activities these days. Small investors have been buying 8-gm gold guinea which is being not only being delivered at home, but is also selling at around 15% less than the market price of gold coins sold by financial institutions and banks.
While the MCX official decline to comment, sources said that a 25 kg contract was awarded in July and in the next two months contracts of 71 kg and 37 kg were also awarded.
?With Diwali round the corner, the October contract is expected to rise significantly as there is a huge demand for gold in the market,? a trader told FE. Since its launch, the MCX is recording a turnover of around Rs 8 crore-Rs 10 crore per day on gold guinea futures. This is for the first time that a commodity exchange in the country has launched a contract that caters to small retailers. Gold guinea traded at Rs 10,110 per 8 gram on the MCX on Monday afternoon, up from Rs 99,90 per 8 gm that prevailed in the middle of May 2008.
Another trader with the MCX said that the gold guineas of 8-gm size was mostly being purchased by retail consumers as investment or for ornamental usage. ?The MCX has provided quality certification from the London Bullion Market to all the gold guineas traded in the exchange,? he said. The MCX has set up delivery centres at Ahmedabad, Delhi, Mumbai, Hyderabad, Chennai, Bangalore and Kolkata, for physical delivery of gold guineas.
The rates of gold at physical market ranged between Rs 12,690 – Rs 12,782 per 10 gm on Monday. At the MCX, gold is amongst the top three traded commodities during September 15-30.
Gold business on the MCX during the second fortnight of September 2008 stood at Rs Rs 12,7518 crore. India tops the list of gold consumption in the world with an annual demand of more than 773 tonne in 2007.
