While gold saw some buying on auspicious occasion of Dhanteras, it fell by Rs 140 per 10 gm mainly due to profit-booking in the national capital. The weak trend overseas due to dollar strengthening against major currencies further eroded the appeal of the metal as a safe haven and also contributed to the fall in the prices. In Mumbai, the prices fell by Rs 50 for 10 gram of 22-carat gold, and by Rs 55 to Rs 31,854 per 10 gram of 24-carat gold. In Ahmedabad, spot gold was trading at Rs. 29,708 per 10 grams with a loss of 0.54 per cent at the Multi-Commodity Exchange (MCX).
In the futures market too, gold for delivery on December 5, 2017 was trading 0.48 per cent lower at Rs. 29,712 per 10 grams as of 1:33 pm. The fresh weakness in gold price overseas weighed on gold futures.
Globally, the spot gold was down 0.4 per cent at $1,289.20 an ounce, as of 0706 GMT (12:36 pm in India), while US gold futures for December delivery slipped 0.9 per cent to $1,291.70 per ounce, according to news agency Reuters.
Silver, the poor cousin of gold, also recorded a fall of Rs 400 to Rs 41,000 per kg even as retailers made token buying in coins.
Earlier in the day, Finance Minister Arun Jaitley launched gold options trading on MCX. According to reports, MCX will approach the regulator Sebi (Securities and Exchange Board of India) for seeking permission for trading in other commodities like cotton, crude palm oil, silver and copper.
"This marks a very important evolution in trading of yellow metal itself. It hedges all risks by giving them (traders) the option of futures," Jaitley said right after launching the options trade on the auspicious day of Dhanteras.
"I am sure more it formalises, better it is for consumers, jewelers and those trading in this. That's in consonance with the business environment for future that we see for us," Jaitley added.
Trading in gold option has been allowed by the regulator SEBI after 14 years of commencement of commodity exchanges in the country.
Option is an instrument that gives the buyer a right to buy or sell an underlined at a present price on a future date. It is akin to a form of price insurance and, therefore is best suited for hedgers. They are of two types: calls (right to buy) and puts (right to sell). If an investor sees gold prices rising, then he can buy into a call option and take a position in a put option if he expects a bearish trend.
The investor benefits if the expectation of price movements comes true. The European-styled gold options will be hedger-friendly and physically settled, MCX said in a statement. The gold options contract will trade from Tuesday and will expire on November 28 and January 29.