Gold Commodity in Zerodha
As of now, we know the commodity trading and exchanges involved in the trading of commodities. Assuming you’re familiar with this concept, so now we will start with “How to buy Gold Commodity in Zerodha?”.
Gold is considered one of the popular metals to trade on MCX. As per statistics, gold has ample liquidity, and daily, it trades roughly 15000 contracts corresponding to 4500 crores and over. Let me tell you these figures belong to only one type of gold Variant “Big Boy Gold”. Gold is a primary monetary asset than considered as a commodity. It is the world’s oldest international currency and plays important role in global monetary reserve.
Gold is used in varied industries due to its malleable and ductile nature. It comes with a high melting point ad can be easily recycled. The demand for the gold metal is dependent on these four industries: jewelry, investment, central bank reserves, and technology. In Indian society, gold has a special place in everyone’s heart. People buy gold as a means to save/invest for the future. Gold has been a storehouse of wealth in India for thousand’s of years. From ancient times, whenever the socio-economic conditions of the nation is not good, then gold is considered a de-facto currency.
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Types of Gold Variant on MCX
There are multiple types of gold contracts available on MCX for trading. Here is the list of Gold contracts:
- The Big Gold
- The Gold Mini
- Gold Guinea
- Gold Petals
All these variants are derived from underlying Gold only. I think the best way to understand each variant is by its contract specifications:
|Description||Big Gold||The Gold Mini||Gold Guinea||Gold Petals|
|Contract Availability||Feb, April, June, Aug, Oct, Dec||Feb, April, June, Aug, Oct, Dec||All 12 Months of the Year||All 12 Months of the Year|
|Last Trading Day||5th of the Contract Expiry Month||5th of the Contract Expiry Month||Last Day of the contract expiry month||Last Day of the contract expiry month|
|Lot Size/Trading Unit||1kg||100grams||8grams||1grams|
|Quality Specification||995 purity||995purity||999purity||999 purity|
|Delivery unit||1kg||100grams||8grams and in multiples thereof||1gram|
In case you would like to trade in gold, my honest opinion is to stick with Big gold or mini gold contract as liquidity is not so good in all other contracts. Secondly, the liquidity is higher in the nearest month contract it’s a thumb rule ” farther the contract expiry, lower is the liquidity”.
Also Read What is Commodity Trading in Zerodha? | How Does Commodity Trading Works?
Steps to Buy Gold Commodity in Zerodha
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Time needed: 2 minutes.
Please find the simple steps to buy gold commodity via Zerodha:
- Open the kite webpage or app on your device
Firstly open the kite app installed on your device by entering your Zerodha credentials.
- The Market Watch
Once you log in on the platform, you can search the commodity or stock you’re interested to buy it. Keeping the same task in mind, you can search for Gold in the universal search tab and it will populate all Gold stocks or commodities. As we are planning to invest in a Gold commodity so choose the contract open in the nearest month.
- Choose the Commodity from the basket of Open contracts
Once you have got the exclusive list of open gold contracts, you choose the contract for the nearest month. Let’s say we choose Gold21 Jan Fut by clicking on that commodity.
- Click on Buy Option
Now click on the buy option and choose your buying preferences. In case you would like to place an order for futures with an intent to buy at a pre-determined price. Once the details are filled in the order form, click on swipe to buy. Ensure you maintain the margin amount in your commodity trading account for order execution.
- Order Placed
Once you click on swipe to buy, your order will be sent to exchange for execution. As we have placed a limit order, hence it will show in pending orders till not executed. As soon as the price drop to your set price, your order will get executed.
To sum up, we can say gold is the safest investment asset to have in a balanced portfolio from the commodity market. As it has delivered excellent risk-adjusted returns over multiple horizons as compared to other commodities. It has outperformed the other commodities in a low inflation period plus proven a store of value.
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