Different Types of Gold Futures in India Explained: Check gold futures contracts, lot size, purity and settlement on MCX – Business Upturn

India’s gold derivatives market revolves around the Multi Commodity Exchange (MCX), where multiple gold futures contracts are tailored to the needs of institutions, bullion businesses and everyday traders. While all contracts reference high-purity bullion and move broadly with global prices, they differ in lot size, delivery unit, liquidity and who they’re best suited for. Understanding these variations helps traders choose the right instrument for hedging, investing or managing inventory.

How MCX gold futures are priced and settled

• Global linkage: Prices track international bullion benchmarks, then adjust for the rupee-dollar exchange rate, import duties and local taxes.
• Domestic influences: Festive demand, wedding seasons, central bank cues and macro events can sway premiums and near-month pricing.
• Quotation: Contracts are typically quoted in rupees per 10 grams, even when the delivery unit itself is larger or smaller.
• Settlement: All active gold futures on MCX are designed for compulsory physical delivery at expiry. Traders who do not wish to take or give delivery must square off or roll forward before the delivery period begins.
• Purity and vaulting: Fineness is exchange-specified and standardized, with delivery through accredited vaults to ensure quality consistency.

The four main MCX gold futures lines

1) Gold (Standard)

• Who it’s for: Institutional desks, bullion dealers, refiners and sophisticated hedgers.
• Lot size: Typically 1 kilogram, making it the most capital-intensive but also the most liquid contract in the gold complex.
• Quotation and price behavior: Quoted per 10 grams; tends to offer the deepest order book and tighter spreads.
• Purity: Exchange-specified high fineness (commonly 995).
• Settlement: Compulsory physical delivery at expiry unless the position is closed earlier.

2) Gold Mini

• Who it’s for: Small hedgers, MSMEs, active retail traders seeking exposure with lower margin requirements.
• Lot size: Typically 100 grams, providing a more accessible alternative to the standard contract.
• Parity: Tracks the benchmark gold contract closely, enabling scaled hedging or incremental positioning.
• Purity: Standardized to match the larger contract (commonly 995 fineness).
• Settlement: Physical delivery if held to expiry, with the option to square off beforehand.

3) Gold Guinea

• Who it’s for: Jewellers and bullion traders who prefer the traditional Indian “guinea” unit.
• Lot size: Typically 8 grams, reflecting the legacy measurement widely recognized in physical trade.
• Role in the ecosystem: Bridges traditional bullion practices with modern exchange trading and risk management.
• Purity: Exchange-standard fineness (commonly 995).
• Settlement: Delivery-based, unless positions are exited prior to expiry.

4) Gold Petal

• Who it’s for: First-time market participants and micro-scale traders looking for the lowest entry threshold.
• Lot size: Typically 1 gram, the smallest delivery unit among MCX gold futures.
• Accessibility: Enables fine-tuned exposure and small, incremental hedges without large capital outlay.
• Purity: High fineness as specified by the exchange (often 999 for micro units).
• Settlement: Physical delivery upon expiry if the position isn’t squared off.

Choosing the right contract

• Capital and margin: Larger lots (like the standard contract) demand higher margins but usually deliver superior liquidity.
• Hedging precision: Smaller units (Mini, Guinea, Petal) let you tailor hedge sizes to inventory cycles or investment goals.
• Liquidity needs: Active day traders and institutional desks may prefer the standard contract’s depth, while smaller traders often favor Mini or Petal for position sizing.
• Delivery intent: If you plan to take or give delivery, verify delivery centers, vault charges and timing well ahead of expiry.

Quick answers

• Are MCX gold futures physically settled? Yes—delivery is compulsory at expiry unless you close or roll the position before the delivery period.
• Why are there multiple contracts? To cater to different participant sizes, hedging needs and capital capacities, without compromising standardized purity.
• Do MCX gold futures mirror global moves? Broadly yes, after adjusting for currency, duties, taxes and domestic demand-supply factors.

Bottom line: All four MCX gold futures—Gold (Standard), Gold Mini, Gold Guinea and Gold Petal—follow common purity and delivery standards but vary in lot size and liquidity. Pick the contract that aligns with your capital, hedging precision and settlement preferences, and always manage expiry timelines to avoid unintended delivery.