By
Bloomberg
Printed
March 10, 2025
The world’s largest jewellery market is boosting its gold bets.
With the dear metallic setting successive information this yr, jewelers and retail merchants in India are turning to choices on gold futures each for hypothesis and to hedge bodily holdings. Cheaper than futures, the bets have gained new enchantment with the latest surge in bullion, in line with Sugandha Sachdeva, founder of economic analysis agency SS WealthStreet.
Bloomberg
The rise in investor curiosity has develop into obvious on the Multi Commodity Alternate of India Ltd., India’s main commodities bourse: The common day by day turnover of choices on gold futures surged to 605 billion rupees ($7 billion) in February, representing 26% of the overall choices quantity on the change — the largest proportion since October 2021. Choices on crude contracts nonetheless led the buying and selling, however their share fell to 52% from greater than 70% total final yr.
Issues over US President Trump’s tariffs coverage despatched oil to a six-month low final week, pushing traders towards property deemed safer, like bullion — up greater than 7% since his inauguration in January. Whereas the buying and selling of choices will maintain evolving, market gamers are typically bullish on gold, mentioned Gnanasekar Thiagarajan, director of commodity analysis agency Commtrendz Analysis.
“Trump uses shock value — 20%-30% tariff — and then negotiates. All of this uncertainty is bullish gold,” he mentioned.
The dear metallic occupies a revered place in India, the place it’s seen not solely as a retailer of worth and image of wealth, but in addition as a sacred asset imbued with auspicious significance. Gold jewellery, which fell in nearly all of the international locations final yr, slipped solely 2% for India after a July lower in import duties spurred demand, permitting the nation to retake its spot as the biggest jewellery market.
Because the metallic hit file ranges in February, buying and selling of choices on its futures for the month was practically triple the 2024 common, MCX information present. In the meantime, the typical day by day turnover for choices on oil futures dropped to 1.2 trillion rupees, the least since June.
Within the US, buying and selling of gold choices nearly doubled final month from February 2024, in line with CME Group Inc.
“Traders shifted away from crude oil options as they found better opportunities in gold,” mentioned Rahul Kalantri, vp for commodities at Mehta Equities Ltd.
It stays to be seen whether or not the pattern will proceed — turnover of choices on oil futures rebounded final week and fell for gold. However with the present issues surrounding the tempo of financial progress in India and the trajectory of the inventory market, bullion will stay a favourite amongst traders, in line with Thiagarajan.
“Interest in gold and oil is generally inverse,” he mentioned. “What is good for the economy is good for oil. And when it’s not good for the economy or there is uncertainty, people rush to gold.”
