MCX Gold Price

MCX or the Multi Commodity Exchange of India is an independent commodity exchange based in Mumbai. Established in 2003, it offers options trading in gold and futures trading in non-ferrous metals, energy, bullion, and several agricultural commodities. In this article, we will talk about everything that you must know about the MCX Gold price.

Investing in gold is important for your portfolio, regardless of its size, as it offers diversification along with the following benefits:

·        Protects against inflation – In the last five years, gold prices have doubled. If you look at the last decade, they have quadrupled. In India, most investments fail to deliver inflation-beating returns. In such a market, investing in gold can ensure protection against inflation in the long term.

·        Balances the investment portfolio – Typically, Gold shares a low negative correlation with debt at equity. In simpler words, if equities fall, gold rises – thereby hedging your risk.

·        Wealth creation with risk reduction – In case of any macroeconomic disasters, gold is known to provide a cushion to investors. In the long-term, it ensures decent returns too. Therefore, it is one of the few investment options which allow you to reduce risk and create wealth at the same time.

In order to understand the MCX Gold options, let’s look at an example:

Let’s say that the gold futures for delivery on December 20 cost Rs. 35 lakh a kilo today (one contract). Also, the option on that contract is quoting at Rs.35,000.

Now, if you feel that the price will rise beyond Rs. 35 lakh a kilo, then you can buy the option. If the underlying contract increases to let’s say Rs. 36 lakh in a week, then the option increases to Rs. 36,000 too. You can square-off the contract and make a net gain of Rs.1,000 within a week. The seller of the option loses 1,000. On the other hand, if the price decreases to Rs. 34 lakh, then you lose 1,000 while the seller gains.

Let’s also look at the same scenario where you feel that the price will fall below Rs. 35 lakh a kilo. In this case, you will sell the option at Rs. 35,000. If the price falls to Rs. 34 lakh, then you gain Rs. 1,000 and if it increases to Rs. 36 lakh, then you lose 1,000.

Before investing in MCX Gold, ensure that you understand how commodity trading works and assess your investment goals carefully. Good Luck!