THE IMPACT OF RISK MANAGEMENT & COMMODITY DERIVATIVES MARKET WITH ALLUSION TO GOLD MARKET

In India, gold demand is also determined to a large extent by its price level and volatility. Commodity specific events such as the construction of new production facilities or processes, unexpected mine or plant closures, or industry restructuring. India is among the apex producers of a number of commodities and has a long history of trading in commodity derivatives. Commodity markets are efficient among all the commodity markets in terms of price risk management. The reasons for inefficiency of other commodity markets were found as low volume of trading during maturity period, lack of hedger’s participation. The role of commodity futures markets in price discovery consists of anticipating the future spot price, which shapes resource allocation. The study is based on secondary data. The data has been collected through various web sites of commodity exchanges, commodity market bulletins and annual reports of Forward Market Commission. The data for the analysis included daily information on prices, traded volumes, open interest and patterns in participation.