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The value of Gold and Silver changes based on the USDINR movements. If the value of USD INR increase or decrease, it appreciate or depreciate the value of commodities traded in MCX as the multiplier changes.

30 Jul 2012

By Ankush Jain
AHMEDABAD (Commodity Online):
USDINR is the major currency pair in the Indian market which affects the price movement or price range in MCX commodities like Gold, Silver, Crude Oil, Copper among others.

How it's affects price movement at MCX
For as many as nine major commodities, the price movement in India’s Multi Commodity Exchange (MCX) is not just dependent on fundamentals and technical s but is strongly linked to US Dollar/Indian Rupee (USD-INR) movements. It happens more often in gold and silver.

The value of Gold and Silver changes based on the USDINR movements. If the value of USD INR increase or decrease, it appreciate or depreciate the value of commodities traded in MCX as the multiplier changes.

This phenomenon can be understood by a simple example of Gold prices. When Spot Gold in international market touched the life time high level of $ 1920 that time Gold at MCX traded around Rs 28740 and USDINR traded around 46.71. and recently in International Spot Gold touched the level of $ 1558 i.e. approx 19% correction in Gold prices in international market meanwhile at MCX on the same day gold traded at around Rs 29973 and USD/INR trading around 57.52 translates into approximately 4% and 23% upside movement respectively in Gold and USD/INR.




In short every 1% increase or decrease in value of USDINR could significantly alter prices of all the nine major international commodities traded on MCX even if other factors remain the same.

(Ankush Kumar Jain is an Analyst with Commodity Online. For comments, suggestions and queries, mail to tips@commodityonline.com or log on to tips.commodityonline.com)


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