Introduction

MCX Gold is a futures contract traded on the Multi Commodity Exchange of India that lets buyers and sellers agree today on a price for gold to be delivered or settled at a future date. It is India's most actively traded commodity futures contract and the primary instrument through which Indian traders, jewellers, and importers hedge gold price risk without physically owning the metal.

The "MCX" in MCX Gold refers to the exchange — the Multi Commodity Exchange of India, regulated by SEBI — not a separate variety of gold. The underlying commodity is the same international gold that trades on COMEX in New York and the London Bullion Market, priced in rupees for the Indian market.

How MCX Gold Is Priced

MCX Gold does not have an independent price. It is derived from the international spot price of gold through an import parity formula:

MCX Gold (₹/10g) = (COMEX $/troy oz ÷ 31.1035) × 10 × USD/INR × 1.15

The 1.15 multiplier reflects India's current import duty and GST load on gold — approximately 10% basic customs duty plus 5% GST, compounding to roughly 15% on the landed cost. This formula means three variables move MCX Gold: the COMEX price, the rupee-dollar exchange rate, and India's import duty policy.

When COMEX rises, MCX Gold rises. When the rupee weakens against the dollar, MCX Gold rises — even if COMEX is flat. When the government raises import duty, MCX Gold rises overnight. All three effects are independent and can work in the same direction or offset each other.

MCX Gold Contract Specifications

  • Exchange: Multi Commodity Exchange of India (MCX)
  • Lot size: 1 kg (1,000 grams) for the standard Gold contract
  • Price quote: INR per 10 grams
  • Purity: 995 fineness (99.5% pure gold)
  • Tick size: ₹1 per 10 grams (₹100 per tick on one lot)
  • Delivery unit: 1 kg bar of 995 purity
  • Settlement: Compulsory delivery for positions held at expiry; daily cash MTM otherwise
  • Daily circuit limit: ±6% of the previous session's settlement price
  • Trading hours: 9:00 AM to 11:30 PM IST on weekdays

MCX also offers a Gold Mini contract (100 grams, one-tenth the standard lot) and a Gold Guinea contract (8 grams, aligned with the traditional Indian measurement for jewellery), catering to smaller traders and hedgers.

How MCX Gold Differs from Buying Physical Gold

When you buy MCX Gold futures, you are not buying gold — you are entering a price agreement. The key differences:

No immediate ownership. A futures position gives you exposure to gold price movements. Physical gold gives you the metal. Most MCX Gold positions are squared off before expiry; only a small fraction result in actual delivery.

Leverage. MCX Gold requires a margin deposit — typically 5–8% of the contract value — rather than the full purchase price. This magnifies both gains and losses relative to capital deployed. A 1% move in gold prices produces a much larger percentage change in your margin account.

Daily settlement. Your MCX Gold position is marked to market every day. Profits are credited and losses are debited to your margin account overnight based on the official settlement price from the MCX bhavcopy. Physical gold held in a locker has no daily settlement.

Purity standardisation. MCX Gold requires 995 fineness for delivery, stricter than most retail gold jewellery (which is 22-karat or 91.6% pure). The MCX price therefore reflects investment-grade gold, not jewellery-grade gold.

Regulated counterparty. MCX acts as the central counterparty for all trades through its clearing corporation, eliminating the counterparty risk present in over-the-counter gold transactions.

Who Uses MCX Gold

Jewellers and bullion dealers use MCX Gold to hedge inventory against price falls. A jeweller holding 10 kg of physical gold can sell MCX Gold futures to lock in the current price, neutralising the risk of a gold price decline before they sell the finished jewellery.

Importers hedge the dollar-rupee-gold combination by taking positions that protect against either COMEX moves or rupee depreciation between the time they book an import order and when the gold arrives.

Retail traders take directional positions based on macro views — US Fed policy, geopolitical risk, dollar strength, or India-specific demand seasonality around Diwali and Akshaya Tritiya.

Arbitrageurs exploit any gap between the MCX price and the theoretical import parity value, enforcing the pricing formula and keeping the market efficient.

What to Watch

  • COMEX Gold spot price — the international anchor; MCX follows it with a rupee and duty overlay
  • USD/INR spot rate (RBI reference rate, published at 1:30 PM IST daily) — the currency component
  • Union Budget (February 1) — the primary event for import duty changes
  • US Federal Reserve FOMC meetings — rate decisions and dollar direction affect COMEX
  • India gold import data (DGCI&S monthly release) — demand signals that can affect physical premium
  • MCX Gold OI — open interest build ahead of major macro events signals institutional positioning
  • Akshaya Tritiya and Dhanteras dates — seasonal demand peaks that historically support MCX Gold prices