RBI now allows gold hedging in overseas markets

MUMBAI: With gold prices shooting over the roof and projected to top the $2700 per ounce mark this year amidst rising geopolitical tension in the Middle East, the Reserve Bank on Monday issued a master circular allowing resident entities to hedge their gold exposure in overseas markets.

The move follows an announcement to this effect in the February 8, 2024 monetary policy statement regarding hedging of price risks of gold in overseas markets.

It may be noted that resident entities were permitted to hedge their exposure to price risk of gold on exchanges in the International Financial Services Centre from December 12, 2022.

“To provide further flexibility to resident entities to hedge their exposures to price risk of gold, it has now been decided to permit them to hedge their exposures to price risk of gold using OTC derivatives in the IFSC in addition to the derivatives on the exchanges in the IFSC, with immediate effect,” the monetary authority said.