Introduction

Investing isn’t restricted to buying and selling shares. A popular and age-old avenue of investing is buying and selling gold. With changing times, the means of investing and trading have also morphed. In today’s contemporary world, you no longer have to physically trade gold but can invest in instruments based on them. Two instruments that have streamlined this process and made it more convenient for investors are gold futures and options.

While trading them is simple, you need to understand the different factors affecting gold prices and the expiry dates of these contracts. Keep reading to learn more about them in this article.

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What are Gold Futures and Options?

A class of financial instruments known as derivatives get their value from the underlying asset they are based on and don’t have any inherent value. Futures and options are two primary types of derivatives in the market. Both entail a contract between two parties to purchase or sell the underlying asset at a predetermined price later.

Gold Futures

A future is a contract where a commodity is offered for sale at a predetermined price to be settled later. Gold futures therefore refer to a transaction where one party promised to receive the delivery of gold at a predetermined and agreed upon date in exchange for a downpayment with the remainder to be paid at the time of delivery. These contracts come with an obligation to execute the trade on or before expiry.

Gold Options

Just like futures, gold options are a derivative contract that give the holder a right to buy or sell a specific amount of gold at a predetermined price on a given date. The right to either buy or sell at an agreed price involves the payment of a premium. Unlike futures, options come with a right not an obligation to buy or sell the gold.

Understanding Expiry Dates

Gold futures and options are both derivative gold contracts and an incredibly convenient means to trade gold. Both involve a contract to buy or sell the underlying commodity at a specific date for a predetermined price. The last date on which these contracts can be traded is known as the expiry date. Once expired, the contracts lose their value.

Factors Affecting Gold Price on Expiry

• Primary factors affecting the price of gold are the forces of demand and supply. When demand is more than supply, cost increases and vice versa.

• Macroeconomic indicators such as GDP growth and inflation directly affect gold prices. For instance, the cost of gold usually increases with inflation since most consider this yellow metal to be a hedge against inflation.

• Another factor that affects gold pricing are the interest rates. When interest rates increase, the price of gold reduces and while liquidity increases in a low-interest-rate environment resulting in higher prices.

• Other factors affecting gold prices include fluctuations in currency and geopolitical events.

Expiry Dates of Gold Futures and Options in 2025

Here are the expiry dates for MCX gold futures and options contracts in 2025

Conclusion

Gold futures and options present a unique yet flexible means to leverage gold price movements without any massive capital or physical storage. However, both these instruments are dated and come with a fixed expiration date. Understanding the expiry dates and factors affecting the movement of gold prices is needed for smarter decision making. As with any other investment, it’s important to consider your risk tolerance, investment horizon, and financial goals before investing.

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