Gold futures Definition
Gold futures is one of the most popular and traded contracts by traders engaged in commodity trading in India. All major exchanges of world offer gold futures, in India MCX – Multi Commodity Exchange and NCDEX are popular exchanges for gold futures trading. On MCX Gold can be traded in various lot sizes viz. Gold, Gold mini, Gold Guinea, Gold Petal, Gold Global. Here we’re just trying to understand gold futures.
Supply from various central banks across the world, macroeconomic factors like interest rates, growth rate determine gold prices. Gold as an asset has a similar value across the world and is known to be the best safe haven asset classes in the world. As an investment asset class, gold is viewed as a financial asset that retains its value and purchasing power during periods of inflation and deflation both.
Trading in gold futures is similar to trading in equity futures. Gold futures are nothing but exchange traded standardized contracts between a buyer and a seller in which buyer is bound by an obligatory contract to take delivery of specific quantity of gold (lot) at certain pre-decided price on future date.
Usage of Gold Futures
Since, Gold miners and many gold consumers viz. jewellers use gold futures to hedge their price, Gold producers can lock in their selling price buy shorting gold future against available inventory.
Similarly, gold consumers can fix their purchasing price by going long on gold futures.
Gold futures is one of the popular trading product among speculators. By estimating rise or fall in the prices, speculators also buy or short gold futures regularly and prefer cash settlement (settling the difference between buying price of future and price at the time of expiry).
Factors driving Gold Prices and therefore Gold Futures Contracts
How can I forecast gold futures prices?
Gold futures prices are linked to the prices of the underlying asset in Gold which is often driven by one of the following factors.
- Global Macro-economic factors including the movement in the US Dollar and interest rates.
- Hedging demand by producers of gold including gold mining companies
- Demand and supply of Gold from central bank, sale and resale of gold, securitization of gold in Gold loans.
- In India, seasonal factors such as marriages, akshay tritiya, etc also drive gold demand.
Quick Facts and MCX Gold Futures Contract Specifications
Gold Futures Symbol – GOLDDDMMMYYYY
Instrument Type – Commodity Futures
Lot Size (Units) – 1 KG
Gold Price quotes – 10 grams
ELM Margin – 1%
Tick Size – Re. 1 per 10 grams
Underlying asset – Gold
Trading Time – Gold can be traded during the normal MCX market timing.
Trading Gold Futures Live on the SAMCO Trading Platforms
For trading in Gold futures, clients must open a commodity trading account and must activate the segments MCX. Subsequently, the Gold futures contracts can be added and traded on the live trading terminal. Traders must select the Exchange MCX, Instrument Gold and Contract Expiry as desired.
Traders have access to the live gold futures prices which are streamed live from the exchanges and can also access intraday gold futures charts and historical gold futures charts.
Brokerage for trading MCX Gold Futures
With SAMCO, India’s leading discount broker, Gold futures can be traded at Flat Rs. 20 per executed order or 0.02% of turnover whichever, is lower. Calculate your savings for trading Gold futures on the commodity brokerage calculator.
Other Charges applicable while trading in MCX Gold Futures