India, the world’s largest jewelry market, is significantly increasing its investments in gold.
As gold prices continue to set new records this year, jewelers and retail traders in India are turning to options on gold futures for both speculation and to hedge their physical gold holdings. These options, which are cheaper than futures contracts, have become more attractive due to the recent surge in bullion prices, according to Sugandha Sachdeva, founder of financial research firm SS WealthStreet.
This growing investor interest is reflected in the trading activity on the Multi Commodity Exchange of India Ltd (MCX), the country’s leading commodities exchange. In February, the average daily turnover for options on gold futures rose to 605 billion rupees (approximately USD 7 billion or RM 31 billion). This accounts for 26% of the total options volume on the exchange, the highest proportion since October 2021. While options on crude oil contracts still dominated trading, their share dropped to 52% from over 70% last year.
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