What is a Goldhedge contract?

Published: Tuesday, February 11, 2014, 10:51 [IST]

To make trading in gold via Gold futures contract more transparent, National Commodity Derivatives Exchange (NCDEX) introduced Goldhedge contract in mid-January. The contract is directly linked to international gold prices and excludes other charges including premiums, customs duty, VAT, local sales tax, octroi etc. To know in what respect newly introduced Goldhedge contract is different from regular Gold Futures contract traded in the market refer to the table below:

Points of difference between Goldhedge contract and Gold futures contract traded in the market:

Point of difference	NCDEX Goldhedge contract	Gold futures contract
Purpose	Offers transparent and cost-effective hedging tool	Standardized contract that provides hedge against inflation and also proves suitable for speculators
Terms of Settlement	Intention-matching contract. Settlement or delivery to effect only when buyer as well as seller agree in respect of quantity and location in advance else contract is settled in cash	Delivery-based settlement occurs on the date and time decided in advance for the transaction
Participants	All customer segments including retail investors, physical traders and jewellers shall trade in gold through Goldhedge contract
Contract expiry	Expiry of Goldhedge contract is aligned with the expiry of currency futures contract
Contract size	Contract for 1kg and 100 gm GoldH100 is available currently	Maximum order size is 10 kgs
Contract value	Lower in comparison to contracts traded on other exchanges as several charges and customs duty is excluded	Involves higher cost or contract value is more in comparison