Bullion Market

## What it is The bullion market is the marketplace for trading precious metals in bulk physical form — chiefly gold and silver as bars and coins — along with the paper and exchange-traded instruments linked to them. "Bullion" refers to high-purity metal valued by weight and fineness rather than as jewellery. The market spans physical spot trading, futures, ETFs, and digital gold.

## The Indian bullion landscape India is one of the world's largest consumers of gold, so its bullion market is huge and multi-layered:

- Physical spot: dealers, jewellers and bullion houses trade bars and coins; import duty, GST and the rupee-dollar rate heavily influence local prices versus global benchmarks. - IIBX (India International Bullion Exchange) at GIFT City, Gandhinagar — set up to channel and formalise gold imports and give India a price-discovery role. - MCX futures: gold and silver futures on the Multi Commodity Exchange let traders take positions and hedge. - Gold ETFs and Sovereign Gold Bonds (SGBs): paper gold for investors who want exposure without storage. SGBs, issued by the RBI, even pay 2.5% annual interest and offer capital-gains tax exemption if held to maturity — though fresh SGB issuance has been paused/scaled back recently. - Digital gold apps offer fractional ownership backed by vaulted metal.

## Why investors care Gold is the classic hedge against inflation, currency depreciation and uncertainty, and a portfolio diversifier because it often moves differently from equities. In rupee terms, gold gets a double tailwind when the rupee weakens against the dollar, since global gold is priced in USD. During global risk-off episodes, Indian bullion prices frequently hit records.

## Practical and tax points - Physical gold carries making/storage costs, purity risk, and is taxed on capital gains (holding-period rules apply; recent budgets revised the long-term holding period and rates for various assets — check current norms before selling). - ETFs and SGBs are cleaner, lower-cost ways to hold gold; SGBs are the most tax-efficient if held to maturity. - Allocate gold as a diversifier (commonly ~5–15% of a portfolio), not as a core growth engine.

Bottom line: the bullion market gives Indians many routes to gold and silver — from physical bars to MCX futures, ETFs and SGBs — and remains a key hedge, with the rupee and import duties making local prices distinct from the global screen.