Gold Rate Today: Prices of yellow metal decrease, silver moves up! What is gold futures contract, how to avoid the risk?

Gold Rate Today: After a steep rise, gold prices have somewhat declined, which is good news for investors. You can purchase these precious metals if you'd like to invest. The days of women accessorising their outfits with gold jewellery for special occasions are long gone. The asset's long-term profitability and the economy's unpredictable growth rate are attracting the attention of institutional investors as well. It also acts as a diversifier, reducing losses incurred during periods of stock market volatility. Precious metal is a typical example of a liquid asset that can be helpful in gloomy circumstances. The yellow metal guards against inflation and currency depreciation.

What is gold futures contracts and what should you do to avoid the risk?

Gold futures contracts are available from the NSE, BSE, and Multi Commodity Exchange (MCX) in India. It is primarily used as a hedging tool against price risk by companies involved in the production and trading of gold. The exchanges also provide the fold futures in small-scale denominations to meet the needs of each investor. Trading can be difficult even for experienced investors who have a strong understanding of derivatives. You can purchase and sell gold at a later time by entering into a gold futures contract. Although the value is determined at the time of transaction, the gold contract is settled on the maturity date. To reduce the risk of volatility, investors should keep a margin until the settlement. Depending on the expected volatility in the amount, the range can be between 4% and 10%.

Price of gold in some major cities

Gold Rate Today: Checkout the rates on MCX

The historically low correlation of gold with other financial assets makes it a popular choice among investors as a hedge against potential economic downturns. Rising gold prices usually result in lower bond yields. With a slight decrease of 0.12 percent, gold futures with a February 5, 2024 maturity date were trading at Rs 62562 per 10 grams on the MCX. The price of silver futures, which mature on March 5, 2024, saw an increase of 0.53 percent, and were trading at Rs 72720 per kg on the MCX.

Disclaimer: (This information is provided solely for informational purposes. It is important to note that investing in the market or a business idea involves market risks. Before investing money as an investor/ owner/ partner, always consult an expert. DNP News Network Private Limited never advises to invest money on stocks or any specific business idea. We will not be liable for any financial losses.)

Keep watching our YouTube Channel ‘DNP INDIA’. Also, please subscribe and follow us on FACEBOOK, INSTAGRAM, and TWITTER