Global, Indian gold prices: The arbitrage opportunity

In dollar terms, and minus strong external stimuli, the Indian and global gold prices should be aligned – because the Indian price is set by the global price. However, when there are strong external factors, the Indian price in dollars can be different from the global price. That difference opens up the possibility of arbitrage.


The chart below shows global and Indian gold prices (in dollar terms) from January 2012 onwards. Indian prices in dollars have been higher in some periods – thanks mainly to duties on gold imposed by the government. For those with trading acumen, these differences on a daily basis are arbitrage opportunities in a global market.