MCX to Introduce Gold Ten Futures Contracts Starting April 1

The Multi Commodity Exchange of India (MCX), the country’s largest commodity trading platform, has announced the launch of Gold Ten (10 gram) futures contracts, set to commence trading on Tuesday, April 1, 2025. These contracts will have expiry options for April, May, and June 2025.

According to market analysts, the introduction of Gold Ten futures is aimed at offering a more accessible and cost-effective avenue for investors and traders seeking to hedge their positions in the bullion market. The move is expected to boost market participation and improve price discovery in gold trading.

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Each contract will have a trading unit of 10 grams, with prices quoted on an ex-Ahmedabad basis. The price will factor in all import duties and levies but will exclude GST and other applicable taxes.

The timing of this launch is particularly significant, as gold prices have been trading at record highs. The MCX gold rate is inching closer to the ₹90,000 per 10 grams mark, supported by a strong rally in global bullion markets. On Wednesday, gold futures on MCX reached ₹88,970 per 10 grams, highlighting the growing interest in the commodity.

Key Features of Gold Ten (10 Gram) Futures Contracts

Contract Specifications

• Symbol: GOLDTEN
• Trading Unit: 10 grams
• Maximum Order Size: 10 kg
• Tick Size: ₹1 per 10 grams
• Daily Price Limits: Initially set at 3%, extendable to 6% and further to 9% during periods of high volatility
• Margin Requirements: A minimum initial margin of 6% (or as per SPAN), along with an extreme loss margin of 1%
• Trading Hours: Monday to Friday, 9:00 a.m. to 11:30/11:55 p.m. (adjusted for US daylight saving time changes)
   

Open Position Limits

• Individual Traders: A cap of 5 metric tonnes (MT) or 5% of the total market-wide open position, whichever is greater
• Member Firms (for all clients combined): 50 MT or 20% of the total market-wide open position, whichever is greater
   

Delivery and Settlement

Gold Ten futures contracts will be settled through compulsory delivery at MCX’s designated clearinghouse in Ahmedabad, with additional delivery locations in Mumbai and New Delhi. The gold delivered must adhere to a 999 purity standard and must originate from LBMA-approved suppliers or MCX-certified domestic refiners.

A staggered delivery process will begin five trading days before contract expiry, allowing buyers and sellers to express their delivery preferences. If no preference is indicated, the position will be automatically assigned for compulsory delivery upon contract expiry.

The delivery period margin will be determined as the higher of either 3% + five-day 99% Value at Risk (VaR) of spot price volatility or 25%.

Final Settlement Price Determination

On the expiry date, the Due Date Rate (DDR) will be based on the Ahmedabad spot price for gold (10 grams, 995 purity), adjusted for 999 purity. In case of unforeseen circumstances where the spot price is unavailable, MCX Clearing Corporation will use prescribed guidelines to establish the final settlement price.

Market Impact and Expectations

The launch of Gold Ten futures contracts is anticipated to have a significant impact on the Indian bullion market, improving liquidity and providing traders with a structured, transparent, and efficient platform for participating in gold price movements.

For retail investors, these smaller-sized contracts lower the entry barrier, making it easier for them to hedge their gold investments without committing to larger contract sizes. Meanwhile, institutional investors can benefit from the enhanced liquidity and structured risk management tools that the contract offers.

Furthermore, given the current surge in gold prices, traders and investors can use these futures contracts to hedge against volatility and make more informed decisions in their bullion portfolios. The increased participation in Gold Ten futures is expected to contribute to better price discovery and more efficient hedging mechanisms in the market.

With gold continuing to play a crucial role as a safe-haven asset, the MCX Gold Ten futures contract provides an additional avenue for market participants to diversify their portfolios and manage risk effectively.

As global economic uncertainties and inflation concerns persist, the demand for gold remains strong. The Gold Ten contract is positioned to attract a wide range of investors, from small traders to large institutions, fostering greater liquidity and price efficiency in India's bullion market.