Bullion Market – Gold & Silver Trading

Introduction

The Bullion Market deals with precious metals like Gold and Silver. India is one of the largest consumers of Gold in the world.

1. Why Trade in Bullion?

1. Safe Haven: In times of war or economic crisis, people rush to Gold, increasing its price.
2. Inflation Hedge: Gold retains purchasing power better than currency.
3. Jewelry Demand: Cultural significance in India (Weddings/Festivals).
4. Industrial Use: Silver is widely used in electronics and solar panels.

2. Forms of Trading

1. Physical: Buying coins/bars from banks or jewelers.
2. Paper Gold: buying Sovereign Gold Bonds (SGB) or Gold ETFs (Exchange Traded Funds). No storage hassle.
3. Derivatives: Trading Gold Futures on MCX for speculation/hedging.

3. Factors Affecting Prices

• USD strength: Gold and USD are inversely related. If Dollar falls, Gold rises.
• Central Bank Reserves: If RBI buys gold, prices go up.
• Geopolitical Tension: Wars increase Gold prices.
• Import Duty: Higher duty in India = Higher domestic price.

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Summary

• Metals: Gold & Silver.
• Role: Inflation Hedge & Safe Haven.
• Modes: Physical, ETF, SGB, Futures.

Quiz Time! 🎯

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