Mumbai — The growing use of gold derivatives could help deepen India’s financial markets by improving price discovery, giving businesses more ways to hedge risk and expanding investment opportunities, according to a new report from the Multi Commodity Exchange of India.
The report said India’s gold market is gradually shifting from a system centered largely on physical ownership toward a more financialized market in which futures, options and other instruments play a larger role.
Gold itself has also evolved beyond its traditional role as a store of wealth, with investors increasingly gaining exposure through exchange-traded funds, digital gold, collateral-based products and derivatives.
The report, titled “Gold Derivatives–Deepening the Market and the Road Ahead in India,” was released during the Global Commodity Conclave 2026.
It said derivatives have broadened participation in organized gold markets beyond traditional bullion dealers to include investors, jewelers, refiners, importers and financial institutions.
Since gold derivatives were introduced in India in 2003, average daily turnover has grown to more than Rs 2.2 lakh crore, while average daily open interest has reached 43 tonnes, according to the report.
About 175 tonnes of gold have also been physically delivered through the exchange mechanism since its launch.
“This physical delivery demonstrates the confidence of market participants in the robustness and efficiency of the organised market mechanism and highlights how derivatives can create a stronger connection between financial markets and the physical gold ecosystem,” the report said.
MCX said the growth of gold derivatives also illustrates a broader opportunity for India’s commodity markets to establish stronger domestic price benchmarks and allow companies to manage commodity price risks within the country.
Exchange-traded futures and options can provide transparent price references that help businesses make decisions involving purchasing, inventory, production, storage and marketing, according to the report.
The report also said Indian gold futures could play a larger role in regional price discovery because of India’s longstanding gold trading relationships with South Asia and Gulf countries.
As liquidity and participation increase across bullion, metals, energy and agricultural commodities, India-specific price benchmarks could become increasingly important for domestic companies and investors, the report said. (Source: IANS)
