On February 8, gold prices bounced back after RBI Governor Shaktikanta Das announced a new policy allowing Indian entities to hedge gold prices directly in the IFSC’s over-the-counter segment.
By 1:40 pm that day, April gold futures were slightly down by 0.15 percent at Rs 62,420 on the MCX.
This move follows the RBI’s December 2022 decision, enhancing flexibility for Indian entities in managing gold price risks. Colin Shah of Kama Jewelry highlighted that this measure aims to protect entities from price swings and currency changes.
Bhavik Patel from Tradebulls Securities noted that gold prices in India track international trends and the rupee’s value. Before this policy, futures markets on domestic exchanges were the only hedging option. The new policy offers more choices in hedging platforms and timings, improving efficiency for retailers and institutions.
Nirpendra Yadav of Swastika Investmart pointed out the benefits for jewelers and importers, reducing risks associated with gold price fluctuations during delivery periods. This policy facilitates better price discovery, quality assurance, and encourages broader market participation, benefiting gold importers, jewelers, and retailers.
Analysts remain optimistic about gold’s outlook, citing geopolitical issues and expected US Fed rate cuts as supportive factors. The World Gold Council predicts a higher gold demand in India for 2024, with the electronics industry’s growing demand supporting gold and silver prices. However, investment decisions should be made after consulting certified experts.