GOLDHEDGE: NCDEX launched gold contract for hedgers

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The National Commodity Derivatives Exchange (NCDEX) launched an “innovative” gold contract “GOLDHEDGE” that will give a transparent and straightforward price benchmark of the yellow metal to the consumer.

  • The contract, GOLDHEDGE, is available for trading from Jan 16, 2014.
  • The unit of trading for GOLDHEDGE is one kg, with a ticket size of Re 1. The duration of the contract is for 1-4 months.
  • It is a new way to discover the price of gold in India. It is innovative and it is the right benchmark for the Indian market where gold touches every household and every pocket.
  • It will mimic the international prices without considering other charges such as customs duty, local taxes and premiums.
  • The one-kg gold hedge contract provides a transparent platform for investors with exposure to the international markets. The final settlement prices is arrived at after taking into account the gold price in dollar terms, rupee value against dollar and the conversion ratio.
  • While the contract is cash settled, a participant can still take the benefit of intention matching where both buyer and seller agree on physical delivery of gold bars. With no compulsion to give or take delivery of gold bars, an investor can ignore the landed cost of the precious metal, local taxes and the premium being charged by sellers due to short supply in the domestic market.

This contract is the perfect solution to the distortion in prices created by fluctuating demand-supply conditions, and takes forward the RBI’s mission of finalization of gold to reduce the burden of imports on the current account deficit.

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