How to Trade Commodities in India: Gold, Silver, Crude and More

Most Indian households already have an opinion on gold. It’s the festival purchase, the wedding gift, the “safe” asset your parents swear by. Commodity trading starts from the same instinct. You have a view on where the price of gold, silver, or crude oil is heading, and you trade on that view without buying or storing anything.

In this blog, you’ll learn how to start trading, how gold and silver contracts work on MCX, how much margin you need, what it costs and how it’s taxed, and the risks to watch for.

What Is Commodity Trading?

Commodity trading means buying or selling a contract whose value moves with the price of goods like gold, silver, crude oil, or natural gas. You never get a gold bar at your door. If the price moves your way, you earn the difference. If it moves against you, you lose that amount.

In India, this happens on exchanges regulated by SEBI, mainly MCX and NCDEX. Here are the main commodity groups.

Note: Farm commodities are limited right now. SEBI has suspended fresh futures trading in seven of them, including wheat, chana, and soybean, until 31 March 2027.

How to Trade Commodities in India?

You can start trading commodities in six steps.

1. Learn the basics first: Know what a lot (the fixed quantity in one contract), expiry (the contract’s end date), and margin (your deposit) mean before you place an order.
2. Choose a broker: Pick a SEBI-registered broker that is a member of MCX, and compare their charges.
3. Switch on the commodity segment: Complete KYC with your PAN, Aadhaar, and bank details, add income proof if the broker asks, and activate commodities on your trading account.
4. Add margin: Put in enough money to cover the margin for one lot, plus some extra as a cushion.
5. Place your order: Pick a contract, choose buy or sell, set the quantity, and add a stop-loss (an order that exits your trade automatically if the price moves against you).
6. Close before expiry: Exit your position, which is called squaring off, or move it to the next month, so you don’t get pulled into delivery.

How to Choose a Commodities Trading Platform?

The right platform is SEBI-registered, an MCX member, and upfront about its charges.

• Registration: Check the broker’s SEBI registration and MCX membership.
• Charges: Compare brokerage per order, exchange fees, and GST.
• Margin clarity: Pick a platform with a margin calculator that shows what you need before you trade.
• Easy to use: Look for clear charts, stop-loss orders, price alerts, and a stable app, since MCX trades late into the night.
• Support: Good learning material and quick customer help matter when you’re new.

What Is MCX and How Does It Work?

MCX, the Multi Commodity Exchange, is where most Indian commodity trading happens. It covers gold, silver, crude oil, natural gas, and metals like copper and zinc. Prices follow global markets, so MCX stays open late into the night.

• Timings: Monday to Friday, from 9:00 AM to 11:30 PM, or 11:55 PM when US clocks are on daylight saving time.
• Contracts: Each one has a fixed lot size and an expiry date.
• Delivery: If you hold a gold or silver contract to expiry, you may have to take or give physical delivery. Crude oil, natural gas, and metals settle in cash. Most retail traders close their trades before expiry to avoid delivery.

How to Trade Gold and Silver on MCX?

MCX offers gold and silver in big and small sizes, so you can pick one that fits your budget. In early September 2026, the smallest gold contract (Gold Petal) needed about ₹1,400 as margin, and a Silver Micro lot needed about ₹30,000.

Note: Margins are approximate figures from early September 2026 and change with price and volatility. Check your broker’s margin calculator for live numbers.

You put up roughly ₹9 for every ₹100 of gold you control, and about ₹13 for every ₹100 of silver. That’s why profits and losses both feel bigger than the money you put in.

How Does a Commodity Futures Trade Work?

A futures trade earns or loses money based on how far the price moves after you enter.

Example: Say you buy one Gold Mini lot (100 grams), worth about ₹15 lakh. You put up about ₹1.41 lakh as margin. If gold rises by ₹1,000 per 10 grams, you earn about ₹10,000. If it falls by ₹1,000 per 10 grams, you lose about ₹10,000.

How Can You Invest in Commodities in India Without Trading Futures?

If you’d rather buy than trade, you can invest in gold and silver through simpler options. Each has different rules and costs.

What Factors Move Commodity Prices?

Commodity prices mostly move because of global demand and supply, the US dollar, and big news.

• Demand and supply: If the world needs more than it produces, prices rise. Oil producers’ decisions, mine output, and factory demand all play a part.
• The US dollar and rupee: Most commodities are priced in dollars, so a weaker rupee can push Indian prices up.
• Interest rates and inflation: Higher rates often pull gold down, while worries about inflation often push it up.
• World events: Wars and sanctions can move crude oil and gold quickly.
• Weather: It matters most for farm commodities.

What Are Common Commodity Trading Strategies?

Most traders use one of a few simple approaches.

• Trend following: Trade in the direction the price is already moving.
• Range trading: Buy near the low end and sell near the high end when the price keeps moving sideways.
• Hedging: Use futures to protect against price changes in goods you own or produce.
• Spread trading: Take opposite positions in two related contracts, such as two different expiry months of the same commodity.

What Are the Costs and Taxes on Commodity Trading?

You pay three things: broker and exchange charges, a small tax called CTT, and income tax on your profit.

• Brokerage and exchange charges: These differ for each broker and contract, so check the charges list first.
• CTT (Commodities Transaction Tax): 0.01% of the sell value on non-agricultural futures like gold, silver, and crude oil. For example, selling a contract worth ₹10 lakh costs ₹100. On options you sell, it’s 0.05% of the premium. Farm commodities are exempt, and you can claim CTT as a business expense.
• Income tax: Profit from non-agricultural commodity futures and options on exchanges is generally treated as business income. It’s taxed at your slab rate and reported in ITR-3, the return form for business income.
• Losses: You can offset these against other business income and carry them forward for up to 8 years.

Tax rules can change and depend on your situation, so check your contract note and talk to a tax professional.

What Are the Risks of Commodity Trading?

The biggest risk is leverage: you trade with a small deposit, so losses can pile up quickly.

• Leverage: The same deposit that boosts your profit also boosts your loss, and you can lose more than your margin if the price moves sharply.
• Sudden swings: Global news can move prices late at night, when you may not be watching.
• Margin calls: If your position loses money, you must add funds fast, or your broker may close it for you.
• Delivery: Holding a gold or silver contract to expiry can mean taking or giving physical delivery.
• Overtrading: Trading too often adds charges and taxes and can eat into your returns.

How Can Beginners Trade Commodities More Safely?

• Start with mini or micro contracts, so each price move costs less.
• Always set a stop-loss.
• Risk only a small part of your savings on any one trade.
• Practise on a virtual (paper trading) account first, if your broker offers one.
• Keep an eye on what moves your contract, like the US dollar and crude oil stock reports.

Conclusion

How to Trade Commodities: FAQs