How to Buy Gold in MCX?

Last Updated: 11 Oct 2024

Gold’s reputation as a special kind of investment has been growing steadily. Investors can benefit from this dazzling metal in a number of ways, including portfolio diversification, inflation protection, affordability, and liquidity. Sovereign Gold Bonds (SGBs), gold futures, physical gold, gold exchange-traded funds (ETFs), and gold mutual funds are just a few of the investment choices available to gold investors.

One of the easiest ways for investors to trade gold is through gold futures. A gold futures contract is an agreement between two parties to exchange gold at a future date and rate that has been predetermined. Gold is traded on a different exchange called Multi Commodity Exchange Ltd., or MCX, because it is a commodity. Reputable commodity derivatives exchange MCX makes it easier for traders to transact in commodities derivatives online. Commodities related to agriculture, energy, and basic metals are also traded on MCX.

Why Invest in Gold?

For generations, gold has been a well-liked investment choice. It is regarded as a safe-haven investment that shields investors from volatile markets. Additionally, diversifying an investor’s portfolio with gold lowers risk. So, let’s explore the benefits of investing in gold: –

1. Hedge Against Inflation

Due to its ability to rise in value during times of rising prices, gold is frequently regarded as a hedge against inflation. Gold tends to appreciate, while paper money loses value, making it an excellent investment for anyone trying to safeguard their fortune.

2. Diversification

One’s portfolio can become more diversified by investing in gold. This implies that the value of gold can stay the same or even rise in the event that other investments, like equities or real estate, experience losses. Protecting one’s investments and lowering total risk are two benefits of diversification.

3. Store of Value

Since gold has long been considered a store of wealth, it is a dependable choice for investments. It is a long-term safe investment because it is unaffected by political unrest or inflation. In addition to being a great asset for investors, gold also maintains its value well throughout economic downturns.

What is MCX Gold?

The biggest commodities exchange market in India and the sixth largest globally is called the Multi Commodities Exchange (MCX). It is headquartered in Mumbai and has a reputation for turning traders’ lives around. With a variety of bullion choices available, gold is the most traded commodity on this market.

Beginners Guide on How to Trade in MCX Gold?

For those who are unfamiliar with trading, the world might appear intimidating, and a lack of understanding can ultimately be your undoing. Experienced investors can take advantage of the market’s features and rewards by following a few easy procedures.

• Locate and pick a broker: The best way to trade the MCX is through a brokerage firm, and the broker should be a good fit for the investor’s goals and values. It is important to confirm that the broker is listed on the MCX.

• Register: Before engaging in any gold trading, a person must register and complete an application. Complete this application with all necessary information, and enclose a copy of the required paperwork. After completing this form, your registration is complete.

• Know the minimum – There is a minimum investment amount for each commodity, and a person investing should make sure they satisfy this criterion.

• Money transfer: Only when funds are sent to the broker will trading be possible. You can transfer this amount using online banking, checks, or direct deposit. An individual can then access their account and engage in trading after completing this.

How is the price of gold futures decided?

It is significant to remember that the price of actual gold and the price that MCX GOLD indicates varies. This is due to the fact that trading activity, along with a number of other factors like the price of gold internationally, the exchange rate between USD and INR, import duties, the current premium and discount, and the conversion from troy ounces to grams, all influence MCX prices. Furthermore, the obvious discrepancy can be explained by the fact that gold futures contracts are for a set period, whereas spot rates apply to the actual gold market.

The following is a widely used formula for MCX Gold price calculation:

Ten grams is the quoted unit for gold on the MCX exchange. 31.1 grams make up one troy ounce.

Thus, the formula for calculating the price of gold for 10 grams is as follows: (International Gold Price) x (USD to INR rate conversion) x 10 (converting Troy ounce to grams).

Steps to Start Trading in MCX Gold

To start trading Gold Futures, you must open a Commodity Account with a reputed broker who is legally registered with MCX. However, there are a number of brokers who help you to open a commodity account.

To start trading in MCX Gold, all you need to do is activate your commodities segment if you already have a trading account with the broker. To activate your commodity area, you must submit one of the following documents:

• Bank Statement for the Past Six Months
• Demat Account Holding Statement
• Bank Fixed Deposit Receipt
• Salary Slip
• Mutual Fund Statement
• ITR Acknowledgment
• Form 16

Once your commodity account is operational, all you have to do is locate the MCX Gold Contract that you want to buy or sell, then place your order by providing the necessary information, including the number of lots, price, etc.

What Affects The Price Of Gold?

The price of gold is influenced by a number of variables, which makes the market for gold dealers dynamic. The following elements are vital in regulating the price of gold:

• Global Demand and Supply: The price of gold is influenced by the global demand and supply of the metal. The dynamics of supply and demand are influenced by variables such as the desire for jewellery, industrial use, purchases by central banks, and mining output.
• Hedge against Inflation: In times of inflation or economic instability, investors gravitate to gold as a hedge against depreciating currencies and inflation. The price of gold may rise in response to increased demand.
• Market Sentiment: Gold prices are influenced by investor behaviour and the general state of the market. Gold prices frequently rise in response to fear and uncertainty in the financial markets, indicating the metal’s role as a haven.
• Central Bank Policies: Gold prices are very susceptible to the decisions and activities of central banks, especially when it comes to monetary and interest rate policies.
• Currency fluctuations: It can have an impact on local gold prices because gold is valued in US dollars worldwide.

The Bottom Line

All levels of traders can purchase and sell gold on the MCX, which offers a user-friendly interface. Gold investments can be diversified and serve as an inflation hedge. To make good trading selections, it is imperative to have a solid understanding of the fundamentals of the MCX and conduct extensive research before purchasing gold. You are now prepared to embark on your adventure into the world of MCX and gold trading after reading this beginner’s guide

Frequently Asked Questions

1. How can I buy gold as a commodity?

Gold is traded on a different exchange called Multi Commodity Exchange Ltd., or MCX, because it is a commodity. Reputable commodity derivatives exchange MCX makes it easier for traders to transact in commodities derivatives online.

2. What is the price of gold in MCX?

According to experts, the MCX gold rate is currently between ₹70,500 and ₹71,500 per 10 gm, and if the top end of the range is broken, the price of gold might rise as high as ₹72,000.

3. What is the easiest way to buy gold?

Although some banks sell gold bars, using internet vendors is far more popular. A pawn shop or private sellers might also be able to sell you gold bars; these sellers might also have gold coins. Costco, a big-box retailer, is joining the trend by providing its members with one-ounce gold bars.

4. What is gold mini in MCX?

On India’s MCX, Gold Mini is a medium-sized choice with a lot size of only 100 grams. It is smaller than the standard Gold contract, whose lot size is a substantial 1000 grams, and larger than Gold Petal, where the lot size is only 1 gram of gold.

5. What is MCX trading time?

It provides a trading platform for a range of commodities, such as energy, base metals, precious metals, and agricultural commodities. The following are the MCX trading hours for the various segments: 9:00 a.m. is the opening time. Time of closure: 11:30 p.m.

6. In which country gold is cheapest?

Hong Kong may have the lowest price of gold globally. Gold coins are available for purchase in many banks, frequently at a reduced price as compared to other nations.