Average daily turnover of gold on MCX increases to Rs 8,268 crore in June

Kolkata: The average daily turnover of gold on the Multi Commodity Exchange has increased to Rs 8,268 crore in June, compared with Rs 6,858 crore in the entire fiscal 2020, as participation of jewellers and small investors has gone up on the exchange after the lockdown.

Shivanshu Mehta, the head of bullion at MCX, said jewellers were increasingly hedging their risk amid the rising gold price.

“Increased prices of gold and higher volatility pose a challenge for jewellers who are recovering from lockdown,” Mehta said. “Their risk management is evidently higher on MCX gold futures and options contracts. This is reflecting in higher ADT (average daily trading) of gold contracts.”

MCX bullion prices are seen as domestic price benchmarks and are used by the entire value-chain for pricing of their transactions. The hedgers on MCX include importers, agencies nominated to import the metal, bullion traders and jewellers, both small and large.

The organised jewellery segment is witnessing growth, which is making the players adopt best hedging practices to keep their books of accounts in a proper shape, industry insiders said. Under rules, listed jewellers need to also disclose their risk management and mitigation methods in annual reports.

Saurabh Gadgil, the managing director of Pune-based PNG Jewellers, said: “Jewellers have come up with many schemes for customers. So, when gold price remains volatile, jewellers have to cover themselves and go for hedging. That is why participation on MCX has increased in June, when Unlock 1.0 started as customers are slowly returning.”

Small investors are also increasingly participating in MCX gold contracts now to earn some quick money since the equity market is not giving them good returns, he said.

Meanwhile, a mild profit-booking was seen in the MCX gold on Wednesday morning after the August contract hit a fresh all time high of Rs 48,333 per 10 gms. The rupee that gained against the dollar on Wednesday also put pressure on the price.

Globally, COMEX Gold hit its highest level since October 2012 on Wednesday morning, as demand was boosted by worries over a jump in coronavirus infections and hopes of more stimulus measures to combat the economic blow.

Holdings at the SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, rose 0.28% to 1,169.25 tonnes on Tuesday.

“Sentiments are positive. Gold has appreciated by 24% this year (25% in 2019) hence we are cautiously optimistic,” said Jigar Trivedi, a research analyst (commodities fundamental) at Anand Rathi Shares & Stock Broker