Commodity brokers worry as clients' bets go wrong in opening

Business standard has posted by Commodity brokers worry as clients' bets go wrong in opening Early indications indicating a win with a marginal difference for the ‘Leave’ vote for Britain has created a situation where many traders’ positions could go wrong. Current trends suggest Britain may exit the European Union, leading to gold rising 5.6% to trade at $1335 over yesterday's close and dollar rupee down below 68 or 1.4%. 

This means gold on MCX will open in higher circuit or hit high circuit of 6% in opening. Margin cover with brokers for precious metals is usually 6% and hence when circuit opens after a breathing period, if additional margin is not deposited, exchanges most likely to block brokers' terminals if they can't cough up additional margins. 

Silver is up 4.5% to $ 18.4er ounce.

On MCX Thursday night, gold closed at Rs.29914 per 10 gram and silver closed Rs.41190 per kg. Gold could open Rs 1,000 higher. Over the past few days, the sentiment in Britain seemed to be turning to ‘Remain’ in EU, which prompted traders in India to go short in gold and long in oil and metals. All bets could go wrong. 

Brent crude was down over 6% to $47.6 and other metals were also down 2-4%. Hence commodity traders could see losses in opening. 

Ajay Kedia, director Kedia commodities said while final results are yet to be out and reports suggest urban vote counting is yet to be known and in case of very close result where difference is in decimal points, that could create dilemmas for decision makers. Still if trend continues they way initial indicators suggest than it is time to remain cautious for market players.

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