The National Commodity & Derivatives Exchange Limited (NCDEX) on 27 May 2015 launched Gold Now platform to undertake forward trading in gold.
Features of Gold Now
• It is an India-centric gold forward contracts platform and involves selling and buying of locally-refined gold.
• The maximum duration of the contract is for 60 calendar days and delivery is compulsory.
• Delivery unit of the contract is 100 grams and 1 kilogram.
• The contract will have six delivery centres viz., Delhi, Mumbai, Ahmedabad, Hyderabad, Cochin and Chennai.
• The NCDEX have tied up with four gold refiners’ viz., MMTC-PAMP, Kundan Group, Shirpur Gold Refinery and Edelweiss for the delivery of the contracts.
• The NCDEX is also planning to set up purity verification centres in partnership with the NCDEX approved refineries.
Importance of Gold Now
Approximately 20000 metric tonnes of gold is estimated to be lying with Indian households, temples and trusts. If mobilized effectively, this could create a domestic supply of gold, while reducing dependence on imports.
The Gold Now platform is intended to complement the Gold Monetization Scheme (GMS) as proposed by the Union Finance Ministry in the draft outline released on 19 May 2015.
Under the scheme banks were allowed to mobilize unutilized gold from customers and buy and sell them on domestic exchanges.
What is a forward contract?
A forward contract is a contract between two parties to buy or sell an asset or commodity at a specified future time at a price agreed upon on the day of the contract. This is in contrast to a spot contract wherein, buying or selling takes place on the spot date, which is normally two business days after the day of the contract.
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Who: Gold Now platform
What: Launched by the NCDEX
When: 27 May 2015