HOW TO TRADE GOLD IN COMMODITY DERIVATIVES MARKET IN INDIA

07 Sep 2026|

3 min read |

by ICICI Securities Team

Commodity

Gold is one of the world's most actively traded precious metals and is widely used for investment, jewellery and industrial applications. It is also considered a safe-haven asset during periods of economic or market uncertainty.

Gold prices are influenced by factors such as global economic conditions, interest rates, the US Dollar, demand and supply, and geopolitical developments.

In India, investors and traders can participate in Gold through commodity futures and options on MCX. Before trading, it is important to understand the contract specifications, lot size, margin, expiry and settlement terms.

Gold Futures

Gold futures are standardised contracts that allow traders to take a buy or sell position in Gold at the prevailing market price, with the contract having a specified expiry.

MCX currently offers Gold futures in different contract sizes, allowing market participants to choose a contract based on their requirements. The available variants include Gold, Gold Mini, Gold Ten, Gold Guinea and Gold Petal.

Table 1: Contract specifications of different gold contracts

Particulars	Gold	Gold Mini	Gold Ten	Gold Guinea	Gold Petal
Contract Size	1 KG	100 grams	10 grams	8 grams	1 gram
Quotation Base	10 grams	10 grams	10 grams	1 gram	1 gram
Delivery Logic	Compulsory
Mark to Market	Mark to Market gains and losses would be settled in Cash for Future Positions on daily basis.
Expiry Date	5th day of contract expiry month.	5th day of contract expiry month.	Last Day of Calendar Month	Last Day of Calendar Month	Last Day of Calendar Month
Tick Size	Rs.1/10 grams	Rs.1/10 grams	Rs.1/10 grams	Rs.1/8 grams	Rs.1/1 grams
Profit/Loss Per INR	100	10	1	0.8	1
Initial Margin	Minimum 6% or based on SPAN whichever is higher
Extreme Loss Margin	Minimum 1.25%

MCX Gold and Gold Mini are deliverable with 995 purity, while Gold Ten, Gold Guinea and Gold Petal provide smaller-denomination contracts with 999 purity, as specified by MCX.

Gold Margin

Commodity futures are traded on margin. This means traders are required to deposit the applicable margin instead of paying the entire contract value upfront.

The margin requirement is not fixed and can change based on factors such as market volatility and exchange requirements. Traders should check the applicable margin before placing a trade.

Important: Margin can change during the life of a contract. Ensure adequate funds are available in your trading account to meet applicable margin requirements.

Gold Options

Gold options provide traders with an alternative way to participate in Gold price movements.

An option gives the buyer the right, but not the obligation, to buy or sell the underlying at a specified price, subject to the applicable contract terms.

MCX currently lists Gold Options and Gold Mini Options. The underlying, expiry, strike intervals, quotation, settlement and other specifications are defined in the respective contract specifications.

Since option specifications can change across contract periods, traders should refer to the latest MCX contract specification before trading.

Table 2: Gold Options

Parameters	Description
Contract	Gold and Gold Mini
Underlying	MCX GOLD FUTURES (1 KG) CONTRACT
Expiry day (Last Trading Day)	As per the Contract Launch Calendar
Global Exchange for Reference Rate	COMEX (Commodity Exchange, Inc.)
Underlying Quotation/Base Value	Rs. / 10 grams
Underlying Price Quote (in Rs.)	Ex-Ahmedabad
Strikes	50 In-the-money, 50 Out-of-the-money and 1 Near-the-money
Strike Price Intervals	Rs. 500
Tick Size (Minimum Price Movement)	Rs. 0.50
Daily Price Limit	The upper and lower price band shall be determined based on statistical method using Black76 option pricing model and relaxed considering the movement in the underlying futures contract.
Mark to Market	The option positions shall be marked to market by deducting / adding the current market value of options positions (positive for long options and negative for short options). Mark to Market gains and losses would not be settled in Cash for Options Positions.
Settlement	On expiry of options contract, the open position shall devolve into underlying futures position as follows:- • long call position shall devolve into long position in the underlying futures contract • long put position shall devolve into short position in the underlying futures contract • short call position shall devolve into short position in the underlying futures contract • short put position shall devolve into long position in the underlying futures contract

Commodity Index

The introduction of commodity-based indices was another milestone in the history of commodity derivative trading in India. A market index is an investment portfolio that reflects a portion of the financial market.

Indices are best investment options for investors, as these products will perform collectively with the individual constituents within them. Commodity Indices solve many of the challenges faced by commodity traders, such as:

1) Delivery of the contract, as upon expiry, the commodity indices are cash settled.

2) Margin payment, as to trade in a commodity index, one needs to pay a single margin only.

For example, to trade in gold and silver separately, investors are required to deposit separate margin for each contract. The BULLDEX, which is an index of gold and silver in a proportion of 70.95% and 29.05% respectively, requires less margin than what you would pay when taking separate positions in one lot of Gold (1 Kg) and Silver (30 Kg) Futures.

Contract Specification of BULLDEX

Parameters	Description
UNDERLYING	MCX iCOMDEX BULLION
Expiry Day (Last Trading Day)	One business day prior to the start of rollover period in the underlying constituent/(s) index.
Underlying Quotation / Base Value	Index Points
Tick Size (Minimum Price Movement)	Rs. 1
Trading Unit	Rs. 15 * MCX iCOMDEX Bullion Index
Daily Price Limit	The base price limit will be 3%. Whenever the base daily price limit is breached, the relaxation will be allowed up to 6% without any cooling off period in the trade. In case the daily price limit of 6% is also breached, then after a cooling off period of 15 minutes, the daily price limit will be relaxed up to 9%.
Settlement	Cash settled

Note: Contract specifications, expiry, margins and other trading parameters may change. Traders should refer to the latest MCX contract specifications before taking a position.

Also Read: How To Trade in The Commodities Market In India?

Summary

Gold is the most attractive commodity for Indians because of its traditional value for ornaments, family wealth, etc., and as a store of value, as it provides a hedge against inflation. In India, gold futures are available for trading in five different variants such as gold regular, gold mini, gold ten, gold guinea and gold petal.

In 2017, MCX launched Options trading in gold futures after gaining approval from the regulator, and later the bullion index, BULLDEX, was launched, thereby giving wider investment and trading options to retail participants.

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