Gold Forward Rate Agreement (GOFRA)

An hedging instrument used by producers who, having drawn down gold loans, can lock in forward gold interest rate exposure.

The GOFRA hedges against the combined effect of moves in both the US dollar and gold interest rates with settlement in dollars. The GOLFRA (Gold Lease Forward Rate Agreement) restricts itself to gold interest rates with settlement in gold.

The increased activity of the central banks in lending gold to the market means that they too have exposure to gold rate volatility and the GODFRA (Gold Deposit Forward Rate Agreement) is tailored to their particular activities. See also Gold Leasing, Gold Lease Rate.