Gold Futures

Gold futures are standardised derivative contracts traded on the Multi Commodity Exchange of India (MCX) that obligate the buyer to purchase, and the seller to deliver, a specified quantity of gold at a predetermined price on a specified future settlement date. The standard gold futures contract on MCX is for 1 kilogram of gold with 995 purity, while a smaller 100-gram mini gold contract is also available for retail participants. Gold futures prices on MCX are influenced by international spot gold prices (in USD per troy ounce on the LBMA), the USD/INR exchange rate, domestic import duties, and local demand-supply dynamics. Gold futures are used by jewellers and bullion dealers to hedge procurement costs, by traders to speculate on gold price movements with leverage, and by investors as a convenient alternative to physical gold without storage costs. Settlement of gold futures can be through physical delivery or cash settlement depending on the participant's preference and contract specifications on MCX.