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How is the price of Gold determined in India
07 Sep 2023

As you must have guessed already, we're referring to gold. It is one of the most sought after metals due to its glitz, liquidity, investment benefits and industrial uses. Gold doesn't show any dramatic price fluctuations during inflationary periods and hence, is a great tool for hedging. But how is the price of this precious metal decided? If you've heard of MCX Gold Price, we'll explain how it all works.

Let’s start by looking at the bigger picture

Commodities markets have strong influence on the economies of nations and people. Shortages on critical commodities make the consumers anxious to acquire the product. While the producers would demand a higher price in order to bring more products on to the market, the consumers would pay a higher price in order to get the product they want. On the other hand, oversupply can have a devastating impact on a region by devaluing the prices of core commodities.

Where does gold fit in?

Commodities are classified into categories.

Energy (including crude oil, heating oil, natural gas and gasoline)

Metals (including gold, silver, platinum and copper)

Livestock and Meat (including lean hogs, pork bellies, live cattle and feeder cattle)

Agricultural (including corn, soybeans, wheat, rice, cocoa, coffee, cotton and sugar)

Latest updates for Commodity Market-Click here

Commodities are not like stocks and bonds

Trading and investing in commodities can be very different from investing in traditional securities such as stocks and bonds. Reputation and reliability are critical ground works that need to be laid while trading in commodities. Commodity trading in the exchanges requires pre-agreed standards so that trades can be executed without the need for physical inspection. You don't want to buy commodities only to find out later that it is of inferior or unacceptable quality. Global economic development, technological advances and market demands for commodities influence the prices of staples such as oil, aluminium, copper, sugar and corn. However, basic economic principles typically follow the commodities markets: lower supply equals higher prices. Latest Reports for Commodity Market-Click here

The standard for Gold in commodities

If the market is volatile or bearish, scared investors scramble to transfer money to precious metals such as gold, which has historically been viewed as a reliable, dependable metal with transferable value. For the investors who are losing money is the stock market, trading in precious metals can create nice returns. Precious metals can also be used as a hedge against high inflation or periods of currency devaluation.

Please maintain caution, as investing directly in specific commodities can be a risky proposition, if not downright speculative without the necessary diligence and reasoning involved.

Planning to Buy Gold this Diwali:Click Here

What is MCX?

MCX stands for the Multi Commodity Exchange. This is the exchange for trading commodities; just like the BSE is for trading stocks of companies. You can trade gold, silver and other precious metals along with agricultural commodities like cotton, coffee etc. The Exchange provides secure and transparent trade mechanisms, and works in conformity with the regulatory framework.

What is MCX Gold Price?

Prices are not calculated at the MCX. Trading activity along with a host of other factors determines the prices. For Silver and Gold, MCX price is dependent on the International Price, USD to INR conversion rate, quoted unit of Gold or Silver, Troy ounce to Grams conversion, and supply & demand of Gold and Silver in MCX Trading.
Latest updates of Gold Market-Click here


So how is the MCX Gold Price determined?

There's a simple formula that factors these effects and calculates the price of Gold.

Quoted unit for Gold in MCX exchange is 10 gms. 1 troy ounce is roughly 31.1 grams.

Hence, the Gold price calculation formula for 10 gm =

(International Gold Price) x (USD to INR rate conversion) x 10

(Troy ounce to grams conversion)


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