The gold, silver, aluminium and zinc you trade on MCX are the same metals quoted on international exchanges like COMEX (bullion) and the LME (base metals), but the two prices are not meant to match. An MCX price is the rupee price of that metal in India: the international benchmark converted into INR, quoted in different units, with import duty, taxes and local costs already inside it. Gold and silver are mostly imported and base-metal prices track the LME, so the MCX price follows the international trend while trading at a different number.
Why aren't the two prices the same?
Several things sit between an international quote and the MCX price:
- Currency. International metals are quoted in US dollars: gold and silver per troy ounce on COMEX, aluminium and zinc per tonne on the LME. MCX quotes in rupees, so the USD/INR exchange rate is built into every MCX price. If the rupee weakens against the dollar, the MCX price rises even when the dollar price hasn't moved at all.
- Import duty and taxes. For gold and silver, which India largely imports, customs duty, cess and GST make up a big part of the domestic price. Base metals carry duties and levies too, though the effect is smaller. The government sets these rates and revises them from time to time, and the gap moves with them.
- Units and purity. The two markets quote in different units. Gold is per troy ounce internationally but per 10 grams on MCX; silver per ounce against per kilogram; aluminium and zinc per tonne on the LME against per kg on MCX. Convert the units, then adjust for purity (999 against 995 gold, for example), before treating the two numbers as comparable.
- Freight, insurance and financing. Bringing metal into India costs money, and all of it sits inside the landed price.
- Local demand and supply. Festival and wedding-season demand, local availability and physical-market premiums or discounts can push the MCX price above or below simple parity.
- Trading hours. MCX and the international exchanges keep different hours. Each price reflects the latest trade in its own market, so a lag between the two is normal, and widest outside the window when both are open.
So how should I read the MCX price?
Read it as the rupee price for that metal in India, which is the benchmark that matters for what you actually buy and sell here. It tracks the international trend, rising when global prices rise and falling when they fall, but it will not equal the converted international figure, because everything above sits in between. To compare the two properly, convert the international price into INR and into MCX units, then remember that duty, taxes and any local premium still separate them.
Things to keep in mind
- The gap is not an error or a data problem. It is the real economics of a rupee-priced metal linked to a global benchmark. The two markets are meant to move together, not to print the same number.
- Duty and tax rates change, so the size of the gap moves when the government revises them. A difference you work out once won't hold forever.
- MCX settles these contracts in rupees; for how that works, see how are commodity contracts settled.
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