Physical Delivery

Physical delivery in commodity futures refers to the actual transfer of the underlying physical commodity—such as gold bars, crude oil, or agricultural produce—from the seller to the buyer upon the expiry of a futures contract, as opposed to cash settlement, where only the price difference is exchanged. In India, MCX commodity futures contracts that are not squared off before expiry can result in physical delivery obligations. Gold and silver contracts on MCX have well-defined physical delivery mechanisms, including accredited vaults and delivery centres. Most retail traders square off positions before expiry to avoid the logistical complexities and costs of taking or making physical delivery.