How commodities prices are calculated in MCX/NCDEX Exchanges:
MCX/NCDEX commodities like Gold, Silver, Aluminum, Copper, Lead, Nickel, Zinc, Crude Oil and Natural Gas prices are dependent on their corresponding international prices, USD to INR Rate Conversion and supply/demand etc.
Following are some of the situations which may arise due to the influence of above mentioned factors.
- When you closely watch mcx/ncdex commodities on your trading terminal, the commodities price suddenly/gradually may go up or down or there may be some volatile movements without any such dramatic change in their international counterparts.
- Sometimes, international commodity prices would have gone up and in Indian Commodity exchanges, commodities price would have gone down and vice versa.
Reason: One among the reason for this price movement is that the US dollar would have strengthened, or weakened, which push the prices high and pull it low respectively.
When US Dollar to INR conversion is at 50 INR and Crude oil Price is 80$ in International Market, MCX price will be 4000 INR (50 multiplied by 80).
When US Dollar to INR conversion is at 49 INR and Crude oil Price is 80$ in International Market, MCX price will be 3920 INR (49 multiplied by 80).
By seeing those movements, you should not take any hasty decision to go for long calls or short calls.
Significance of calculating commodity prices:
Indian Commodity exchanges are closed at 11.30 pm or 12.00 midnight and before the market begins next day, you can approximately know the opening price of the commodities by doing simple price calculation for mcx/ncdex commodities.
It is always better to know the international commodity prices and USD to INR rate conversion so that you can conclude whether to buy or sell.
Prices that you calculate will be approximately close to the Exchange trading prices since there will be a slight difference because of physical/supply demand in mcx/ncdex.
Note: Always calculate prices for the current contracts.
Websites for your reference:
- www.pricegroup.com – To see international prices of Gold, Silver, Natural Gas and Crude Oil.
- www.xe.com – To see USD to INR conversion.
- www.basemetals.com – To see international prices of Aluminium, Copper, Lead, Nickel and Zinc.
Units that you have to know:
- One Troy Ounce = 31.1034768 grams; So 1 gram = 1/31.1034768 of Troy Ounce
- One Metric Ton = 1000 kilograms; So 1 kilogram = 1/1000 of Metric Ton
- How gold, silver prices are calculated in MCX/NCDEX?
- How Aluminium, Copper, Lead, Nickel, Zinc prices are calculated in MCX/NCDEX?
- How Natural Gas, Crude Oil prices are calculated in MCX/NCDEX?
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