City's bullion dealers incur Rs100 crore loss after betting on rising gold prices
The steep upward movement in gold prices has come as a shock for many. Around 60 bullion dealers in Mumbai have together suffered a loss of over Rs100 crore after they placed bets on the gold price.mumbai Updated: Aug 23, 2011 01:20 IST
The steep upward movement in gold prices has come as a shock for many. Around 60 bullion dealers in Mumbai have together suffered a loss of over Rs100 crore after they placed bets on the gold price.
Of these, two bullion traders suffered a loss of Rs20 crore each. The bullion traders, all having offices in Zaveri Bazar area, had been indulging in illegal bets.
As per procedure, the punters place bets on the opening price of gold next day and the closing price the same day. Some also indulge in "forward trading" by betting on gold price touching a new high after a few months.
Traders in the market said that these bullion dealers had placed bets last month, when gold was close to Rs23,000 per 10 gram, on the yellow metal touching Rs26,000 per 10 gram mark by Diwali. They placed bets on hundreds of kilogrammes each, with the two suffering maximum loss placing bets on 1,000kg gold each.
If gold touched Rs26,000 mark or slightly below this by Diwali, the bullion dealers would have made profit of Rs3,000 or less per 10 gram - the difference between the prevailing price last month (of around Rs23,000) and the price during Diwali. Further, if the price crossed Rs26,000 mark, the bullion dealers were required to pay the difference of the amount they had bid (Rs26,000/10 gram) and the price that goes above that.
"They could hold it till Diwali and if price by then falls to Rs26,000 or below then they would gain. However, this seems to be impossible, as experts believe gold would touch Rs30,000 per 10 gram mark by Diwali," said a bullion trader in Zaveri Bazar, requesting anonymity.