At Sovereign Global, our commodities trading desk is designed to help clients manage their exposure to price volatility in crude oil and gold, two of the most significant commodities in the world.
Petroleum
Petroleum products are crucial for numerous institutions across various industries, and the price volatility of crude, being the raw material, can have a significant impact on their manufacturing costs and prices of finished products, which can have sudden and significant effects on the profitability of the company. In order to mitigate this risk, we are able to offer our clients a means to manage their exposure to crude oil price volatility through futures contracts listed at the Multi Commodity Exchange (MCX). These contracts allow for the purchase or sale of a specified quantity of crude oil at a predetermined price and date in the future.
Our traders stay up to date by following political events, monitoring global supply and demand, following organizations like International Energy Agency (IEA), and using technical and quantitative analysis to identify market trends and price movement patterns in crude oil. They leverage this analysis and research in providing a method of risk management that is effective in ensuring stability and profitability for institutions dependent on petroleum products.
Gold
Gold is a precious metal that has deep cultural and traditional significance in India. It is an important asset for many households and serves as a means of investment for investors planning important milestones in their lives, such as marriages. However, gold prices are highly volatile in nature, which can make it challenging for investors to manage their exposure to price fluctuations.
To address this challenge, our fund managers employ a judicious approach in booking future contracts for gold through the MCX. This allows investors to manage their exposure to gold price volatility through futures contracts, which can be an efficient and cost-effective means of investing in gold. By investing the margin money, investors can purchase 6-month future contracts, with our fund managers providing guidance on when to buy or sell based on market conditions.