Trading interest in gold futures rises, open positions at 6-yr high on MCX

High price volatility sparks interest, with futures price ruling higher than spot prices, leading to arbitrage and vibrancy in the options market

High volatility in international gold prices and deep discounts in the physical market, following sharp increase in import duty, have increased trading interest in gold contracts on Multi Commodity Exchange with open interest rising to a six-year high at 30,832 lots (30.832 tonnes). Open interest refers to speculative and hedging positions that have not been squared off.

There was no commodity transaction tax during the first half of 2013, when open interest had previously peaked in January that year. CTT was introduced in July 2013 and huge volumes on MCX and other exchanges had all but dried up. 

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