Precious Metal Derivatives - India

The nominal value in the Precious Metal Derivatives market is projected to reach US$327.90bn in 2024.
It is expected to show an annual growth rate (CAGR 2024-2029) of 1.85% resulting in a projected total amount of US$359.40bn by 2029.
The average price per contract in the Precious Metal Derivatives market amounts to US$0.00 in 2024.
From a global comparison perspective it is shown that the highest nominal value is reached United States (US$11.92tn in 2024).
In the Precious Metal Derivatives market, the number of contracts is expected to amount to 104.30m by 2029.

Definition:

The Precious Metal Derivatives market refers to derivatives of precious metals such as gold or silver. These include financial vehicles such as options and futures. Derivatives allow investors to profit from a commodity’s value development without owning the physical commodity (e.g. instead of owning a unit of gold, an investor could own a derivative of gold). Therefore, physical commodities are out of scope in this analysis.

Structure:

The market contains the following KPIs: annual notional value, the number of traded contracts, the open interest (number of outstanding contracts at the end of a year), the average notional value per contract as well as the price data of popular specific derivatives of this category.

Additional information:

Examples of popular precious metal derivatives are gold, silver, or platinum.

Precious Metal Derivatives, e.g. Gold, Silver, Platinum

Physical precious metal commodities

The Precious Metal Derivatives market in India has been experiencing a notable surge in activity and interest among investors and traders.

Customer preferences: Investors in India have shown a growing appetite for diversifying their portfolios with alternative investment options like Precious Metal Derivatives. The appeal lies in the potential for hedging against inflation and economic uncertainties, as well as the opportunity for speculative trading.

Trends in the market: One prominent trend in the Precious Metal Derivatives market in India is the increasing participation of retail investors. With easier access to online trading platforms and a growing awareness of financial markets, retail investors are actively engaging in trading gold and silver derivatives. Moreover, the introduction of innovative derivative products tailored to retail investors has further fueled this trend.

Local special circumstances: India has a deep cultural affinity towards gold, making it one of the largest consumers of gold globally. This cultural significance of gold translates into a unique market dynamic for Precious Metal Derivatives in the country. The demand for gold derivatives is not only driven by investment purposes but also by cultural events and festivals where gold plays a significant role.

Underlying macroeconomic factors: The macroeconomic landscape in India, characterized by a large and diverse economy, plays a crucial role in shaping the Precious Metal Derivatives market. Factors such as inflation rates, interest rates, and government policies directly impact investor sentiment towards gold and silver derivatives. Additionally, currency fluctuations and global economic trends influence the pricing and trading volume of these derivatives in the Indian market.

Data coverage:

Figures are based on commodity derivatives, their notional value, the number of contracts traded, the open interest (outstanding contracts at the end of a year), and the average value of a contract.

Modeling approach / Market size:

Market sizes are determined by a Bottom-Up approach, based on a specific rationale for each market segment. As a basis for evaluating markets, we use market research & analysis, and data of World Bank, as well as the World Federation of Exchanges. Furthermore, we use relevant key market indicators and data from country-specific associations and national data bureaus such as GDP, wealth per capita, and the online banking penetration rate. This data helps us to estimate the market size for each country individually.

Forecasts:

In our forecasts, we apply diverse forecasting techniques. The selection of forecasting techniques is based on the behavior of the particular market. In this market, we use the HOLT-damped Trend method to forecast future development. The main drivers are GDP per capita an the online banking penetration rate.

Additional Notes:

The market is updated twice per year in case market dynamics change.

This report presents a comprehensive analysis and additional information on the Financial market, in a PDF format.

Precious metals have long been seen as a hedge against inflation and economic uncertainty. When stock markets are volatile or currencies devalue, investors flock to precious metals like gold and silver as a store of value, driving their prices up. Gold, in particular, stands out as the most popular choice for protecting wealth in times of uncertainty, with central banks around the world holding vast reserves to safeguard against currency fluctuations and political upheaval. Also, the demand for gold as an investment outweighs its demand for industrial uses - more so if we also consider owning jewelry as a form of investment. This pattern contrasts sharply to other precious metals. Silver, for instance, has a much stronger industrial demand, due to its use in sectors like electronics, solar panels, and medical equipment. Platinum follows a similar pattern, with industrial demand outpacing investment demand, due to the its many different end uses.