NCDEX introduces 'Goldhedge' contract

For trading, NCDEX reference price will be excluding of prevailing premiums in spot market and import duty

The National Commodity & Derivatives Exchange (NCDEX) has introduced ‘Goldhedge’, an intention-matching (in which delivery is optional, not compulsory), bi-monthly contract.  

While the contract may be lucrative for traders for hedging purpose due to lower price quote, jewellers will not find any difference with available contracts on existing platforms.

According to Samir Shah, managing director of NCDEX, Goldhedge will reflect the international price with multiplying factor as the currency reference rate announced by the Reserve Bank of India (RBI).

For trading, the NCDEX reference price will be excluding of prevailing premiums in the spot market and import duty. However, for delivery both buyers and sellers will have to sit across the table for price negotiation and arrive mutually at the deliverable price. The exchange will be just a facilitator.

Beginning Thursday, the Goldhedge contract will available for trade initially for delivery in March, May and July 2014.

“With RBI restricting gold import, markets have seen so much of volatility in terms of spot premium. Also, with 80:20 rules introduced by the regulator has kept the domestic gold market uncertain. Hedgers, therefore, can find a solution of price volatility in this contract,” said Shah.