India, the world’s largest jewelry market, is increasing its gold investments amid record-high prices for the precious metal.
Jewelers and retail traders in the country are turning to gold options as a cost-effective alternative to futures for speculation and hedging. The surge in bullion prices has made options trading more attractive, according to Sugandha Sachdeva, founder of financial research firm SS WealthStreet.
The growing interest is evident on the Multi Commodity Exchange of India Ltd. (MCX), the nation’s top commodities trading platform. In February, the average daily turnover of gold options reached 605 billion rupees ($7 billion), making up 26% of the total options volume—the highest proportion since October 2021. Although crude oil options remain the most traded, their market share has declined from over 70% last year to 52%.
Market uncertainty, including concerns over U.S. President Donald Trump’s tariff policies, has contributed to this shift. A drop in oil prices to a six-month low last week pushed investors toward safer assets like gold, which has risen more than 7% since Trump took office in January. Despite ongoing changes in options trading, sentiment around gold remains bullish, said Gnanasekar Thiagarajan, director of commodity research firm Commtrendz Research.
“Trump relies on shock value, announcing tariffs of 20%-30% before negotiating. This uncertainty benefits gold,” he said.
Gold holds deep cultural and financial significance in India. It is valued as both a symbol of wealth and a sacred asset. While global gold jewelry sales declined last year, India’s drop was just 2%, partly due to a reduction in import duties in July that boosted demand. The country has now regained its position as the world’s largest jewelry market.
As gold prices hit record highs in February, options trading on its futures nearly tripled compared to the 2024 average, MCX data shows. Meanwhile, daily turnover for oil options dropped to 1.2 trillion rupees, the lowest since June.
In the U.S., gold options trading nearly doubled in February compared to the same month last year, according to CME Group Inc.
“Many traders moved away from crude oil options to take advantage of better opportunities in gold,” said Rahul Kalantri, vice president for commodities at Mehta Equities Ltd.
However, whether this trend will continue remains uncertain. Last week, oil options turnover rebounded while gold options declined. Still, concerns over India’s economic growth and stock market performance suggest that gold will remain a popular investment choice, according to Thiagarajan.
“Gold and oil have an inverse relationship,” he explained. “A strong economy supports oil prices, while economic uncertainty drives investors toward gold.”
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