Gold trading volume up on NCDEX

Volume of trade in gold and gold hedge contracts on National Commodities and Derivatives Exchange (NCDEX) doubled on trader's growing thrust and interest on the exchange platform.

Total volume of trade was reported at 9.6 tonnes in both gold and gold hedge contracts in November from the level of 4.65 tonnes in October.

onsidering India's annual gold consumption of 950 tonnes, however, the volume of trade on NCDEX continued to remain negligible.

Total trading volume in November was reported at 5.57 tonnes in Gold Hedge which shows a spurt of 212 per cent over October 2015. In Gold, the total trading volume showed a monthly jump of 41 per cent to 4.04 tonnes.

The average daily open interest on Gold Hedge surged to 0.56 tonnes, up by 391 per cent, over October 2015. The average daily open interest on Gold also continued to grow to 0.37 tonnes, an increase of 122 per cent over the previous month.

While both the contracts have continued to draw appeal from market participants, the stellar growth seen is a reaffirmation of the efficient risk management it provides to the physical market participants.

The uncertainty over import duty exposes the jewellers to the risk of devaluation of their stock. Hence, they have started hedging their risks on the NCDEX platform.

There has been a considerable increase in the spread positions in the gold contracts, which are found more cost effective as compared to normal positional trades. With the benefit of lesser margin requirements for spread positions, jewellers are finding it an attractive way to hedge import duty.