Loans
Cards
Insurance
Investment
Stock Market
Electronics Mall
CIBIL Score
Knowledge Centre
Calculators
Do not call
En
The bullion market trades gold and silver primarily through over-the-counter (OTC) markets. This involves wholesale trading of physical gold and silver in bars and coins. The London Bullion Market Association (LBMA) coordinates activities in the London bullion market and sets standards for gold and silver bars.
The meaning of bullion refers to precious metals like gold, silver, platinum, and palladium in bulk forms such as bars, ingots, or coins. In India, bullion transactions take place through physical channels such as jewellers and banks, as well as electronic platforms. Among commodity exchanges, the Multi Commodity Exchange (MCX) is the primary venue for bullion trading, with prices closely linked to global markets.
Forms of bullion include:
| Metal | Purity Standard | Common Form Used for Trade |
|---|---|---|
Gold |
99.5% or 24K |
Bars, coins, jewellery |
Silver |
99.9% |
Bars, granules, coins |
Platinum |
99.95% |
Bars, industrial plates |
Palladium |
99.95% |
Bars, coins |
Gold and silver form the largest share of trading volume in the Indian bullion market.
Gold and silver trading occurs through India's bullion market via physical and derivative (futures and options) trading.
The market operates through the following formats:
Involves purchase and sale of gold and silver in tangible form via jewellers, banks, and authorised dealers.
Prices reflect global spot rates, currency fluctuations, import duties, and local demand factors.
Contracts derive value from bullion prices without physical delivery.
Futures: Agreements for future buy/sell at set prices and dates.
Options: Rights to transact at specified prices without obligation.
ETFs: Investment funds tracking bullion prices.
Platforms: MCX, NCDEX, and IIBX handle these transactions.
The bullion market supports gold and silver access through physical and contract-based mechanisms across designated platforms.
The bullion market holds a distinct place in India due to its long-standing association with economic activity, cultural practices, and industrial use. Its relevance extends across households, institutions, and businesses, making it an integral part of the broader financial ecosystem.
Key aspects highlighting its role include:
Store of value
Precious metals such as gold are traditionally used to preserve value, particularly during periods of economic uncertainty or currency fluctuations.
Cultural and social significance
Bullion, especially gold and silver, is widely used in religious ceremonies, weddings, and festivals, forming an essential part of social customs across regions.
Reserve asset function
Gold forms part of the reserve holdings of central banks, including the Reserve Bank of India, supporting monetary and financial stability.
Industrial applications
Metals like silver and platinum are used in sectors such as electronics, healthcare, and manufacturing, linking the bullion market to industrial demand.
These factors explain why the bullion market continues to remain closely connected to India’s economic structure, social traditions, and industrial requirements.
Access to the bullion investment market occurs for price reference, trading activity, and operational exposure tracking. Participation patterns vary by role within the market structure.
Value preservation reference
Precious metals such as gold and silver have historically been used as reference assets during periods of inflation or currency movement.
Portfolio diversification exposure
Bullion prices often move independently of equities and debt instruments, providing an additional asset category within broader portfolios.
Global price linkage
Bullion prices in India are closely aligned with international benchmarks, ensuring transparent price discovery.
Liquidity availability
Bullion markets, particularly on commodity exchanges, offer active trading volumes that support entry and exit across sessions.
Price movement participation
Futures and options contracts allow market participants to engage with short-term price fluctuations without physical delivery.
Extended trading hours
Commodity exchanges offer trading windows aligned with global markets, enabling responsiveness to international price cues.
Raw material price management
Businesses that use precious metals as inputs may use bullion markets to manage exposure to price volatility.
Standardised contracts and settlement
Exchange-based trading provides defined contract specifications, margin frameworks, and settlement mechanisms.
Access to formal trading infrastructure
Electronic platforms enable regulated participation, record-keeping, and compliance oversight.
Overall, the bullion market serves as a structured framework for price discovery, transactional efficiency, and alignment with global precious metal markets across different participant categories.
India regulates bullion trade through these exchanges:
MCX (Multi Commodity Exchange): Offers gold and silver futures.
NCDEX (National Commodity & Derivatives Exchange): Agri-focused with bullion contracts.
IIBX (India International Bullion Exchange): India's first International Bullion Exchange in GIFT City, enables direct imports.
MCX bullion trading operates:
| Session | Time |
|---|---|
Morning |
9:00 AM – 5:00 PM |
Evening |
5:00 PM – 11:30/11:55 PM IST |
The market operates Monday to Friday. Settlement occurs on a T+2 basis.
The bullion market in India functions within a regulated framework designed to support orderly trading and transparency.
Exchange-based bullion trading is regulated by the Securities and Exchange Board of India (SEBI). Recognised commodity exchanges operate under prescribed norms covering participant eligibility, contract specifications, margin requirements, and settlement processes.
Physical bullion trade follows separate standards related to purity, hallmarking, and authorised dealers, governed by relevant regulatory and industry bodies.
Understanding these commonly used terms will help navigate the market:
Spot price: Current market price for immediate delivery
Troy ounce: Standard unit of bullion weight (1 troy ounce = 31.1035 grams)
Hallmarking: Certification of metal purity and authenticity
Margin trading: Contracts purchased by paying a fraction of full value
Price volatility: Driven by geopolitical issues, currency changes, and global demand
Storage and insurance: Necessary for physical gold; adds to the cost
Tax implications: Gains from bullion are taxable under capital gains provisions
Purity concerns: Hallmarking indicates certified purity and authenticity of precious metals
The bullion market operates as a component of India’s economy, linked to trading structures, cultural practices, and price mechanisms.
This content is for informational purposes only and the same should not be construed as investment advice. Bajaj Finserv Direct Limited shall not be liable or responsible for any investment decision that you may take based on this content.
Bullion refers to precious metals like gold and silver in bulk form, typically with high purity and traded by weight.
Bullion trades online through commodity exchanges like MCX, NCDEX, and IIBX using futures contracts. Digital platforms offer ETFs and digital gold/silver units tracking bullion prices without physical delivery. Trading occurs during exchange sessions with T+2 settlement.
On MCX, gold is traded in contracts of 1 Kg and smaller units like 100 grams (Gold Mini).
Yes, as per the Union Budget 2024, gains from physical gold held for more than two years are classified as long-term capital gains and are taxed at 12.5% without indexation. Gains from gold held for two years or less are treated as short-term and taxed according to the applicable income tax slab.
IIBX facilitates direct gold imports for qualified jewellers, with effects on price transparency.
.jpeg)
250 Views
| 1min read
Posted on 19 Dec
102946
Unlock the world of credit! From picking the perfect card to savvy loan management, navigate wisely.
47449
Money Management and Financial Planning covers personal finance basics, setting goals, budgeting...
24733
Explore the investment cosmos! From beginner's guides to sharp-witted strategies, explore India's treasure trove of options.
35086
Navigate the tax maze with ease! Uncover Income Tax 101, demystify jargon with Terms for Beginners, and choose between Old or New Regimes.
18539
Discover essential insights on various types of insurance in India.
4462
Welcome to Tech in Finance, where we explore the exciting intersection of technology and finance...
Personal Loan, Business Loan, Collateral
Credit Score, Report & Analysis
Fixed Deposit, Mutual Fund, NPS, Demat A/C, SGB
General Insurance, Life Insurance, Term Insurance
Stocks, IPOs
Smart Phone, Speaker, EarPhone
Academy 
.jpeg "image not found")
