What do you visualize when you think of metals? May be an iron or steel rod, a gold or silver coin, or a copper wire!

That is sufficient for a preliminary understanding of trading in metals. Metals, which are easily found and easily mined, form the ‘base’ or core of materials, are known as base metals.‘Noble/precious’ metals like gold or silver are mostly used for coating. Silver is unique in a way because it has wide industrial applications as a base metal as well.

Non-ferrous (non-iron) base metals that are traded in commodity markets in India are Aluminum, Copper, Lead, Zinc, and Nickel. Precious metals traded are gold and silver. Precious metals, though they have lost some sheen as investment vehicles, are attractive trading instruments. The Multi Commodity Exchange (MCX) is the largest commodity market in India, and gold is available in four types of future contracts.GOLD ( known as gold big) future contracts have a lot size of one kg. GOLDM, GOLD GUINEA, and GOLD PETAL have lot sizes of 100 g, 8 g, and 1g respectively. Options are available in GOLD and GOLDM types.SILVER(Big),SILVERM (Mini), SILVERMIC(Micro) are the future contracts for Silver in MCX. They have 100, 5, and 1 kg lot sizes, respectively. Options are traded in SILVER and SILVERM types. Currently, SILVERMic requires a margin of INR 8,000 for trading in one lot. Among the base metals, aluminum, lead, and zinc have a mini future in addition to their regular future. Copper and Nickel have only regular contracts, and mini contracts are currently unavailable. Contracts for CRUDEOIL, CRUDEOILM, and NATURALGAS are available in the energy sector.

How is it different from equity market trading? There is no separate spot segment in metals. The prices of metals are more predictable than those of equities. Prices closely reflect the international market. Traded for a longer duration until late in the evening. Demand and supply are the major determinants of price, particularly in base metals. Supply chain disruption and geopolitical catastrophes (e.g., the impact on Nickel prices following the Russia-Ukraine conflict) have telling effects on the price. In the context of equity market turmoil, people find safer bets in precious metals.