Gold has always been a favorite in Pakistan, whether it is bought as jewellery, bars or as a store of value. Today, you can also trade gold prices through the Pakistan Mercantile Exchange (PMEX), without buying and storing the metal yourself. But gold futures work very differently from buying a bar at the bazaar, and they carry real risk.
If you want to learn how to trade gold on PMEX, this guide explains the contracts, how margin works, the risks involved and the steps to get started.
What is gold trading on PMEX?
The Pakistan Mercantile Exchange (PMEX) is Pakistan’s commodity futures exchange, licensed and regulated by the Securities and Exchange Commission of Pakistan (SECP). On PMEX, you trade a futures contract linked to gold. Some contracts are cash-settled, while others have physical-delivery arrangements, so check the specification of the contract you choose.
For a cash-settled contract, a buyer gains if the price rises and loses if it falls; a permitted short position works in the opposite direction. Short-selling rules differ by product. The published one-tola specification requires sellers to have gold credit and does not allow uncovered short selling. Open positions are marked to market daily.
Types of gold contracts on PMEX
Published PMEX specifications describe several gold contract sizes and settlement arrangements. The table below compares two examples; it is not a complete list of currently available contracts. Ask your broker which products are active and available to you.
| Comparison | One-tola example | Ounce-based examples |
| Price quoted in | Rupees per tola | US dollars per troy ounce |
| Unit | 1 tola = 11.664 grams | Troy ounces; published examples include 1 ounce and 10 ounces |
| What it follows | Rupee-quoted gold price under the contract specification | International gold price, benchmarked to the Commodity Exchange (COMEX) contract |
| Settlement | Gold-credit / delivery arrangements; confirm closing and withdrawal rules | Cash settlement in Pakistani rupees |
| Contract life | Short-dated contracts, listed for a short period at a time | Monthly contracts, with the next few months available |
| Trading hours | Check current session and expiry-day cut-off | Check current session and expiry-day cut-off |
These details come from PMEX’s published contract specifications. The exchange can change contract terms, margin rates and hours, so always check the latest specification and ask your broker before you trade.
How international gold futures are settled
For ounce based contracts, everything is settled in rupees. At the end of each trading day, your open positions are marked to market. This means your profit or loss for the day is calculated using the exchange’s daily settlement price, converted into rupees at the USD/PKR rate set by the exchange, and credited to or debited from your account.
So you are exposed to two things at once: the gold price in dollars and the dollar rupee exchange rate.
A simple illustration
Suppose you buy one 1-ounce gold contract, and the gold price rises by $20 per ounce. Your gain is $20 converted into rupees at the exchange rate. If the price falls by $20, your loss is the same amount. Brokerage commission and other charges are extra. This is an illustration only, not a forecast or a real trade.
What is margin, and why does it matter?
Futures are traded on margin. Instead of paying the full value of the contract, you deposit a smaller amount as security. This lets you control a larger position than the cash you put up, which is known as leverage.
- Initial margin: the amount you must deposit to open a position. For ounce-based contracts, PMEX’s specification says it is based on a risk model (value at risk), is collected in Pakistani rupees and is set by the exchange.
- Maintenance margin: the minimum balance you must keep while the position is open. If your account falls below it, you may get a margin call, which is a request to add funds.
- Special margin: the exchange can increase margin for short periods when markets are very volatile.
The published one-tola gold specification lists a minimum buyer initial margin of 25% in cash and a buyer maintenance margin of 15%. These are specification figures, not a live margin quote. Confirm the current requirement for the exact contract before placing an order.
Why leverage cuts both ways
Leverage can magnify profits and losses. For illustration, if your deposit is 10% of the contract value, a 10% adverse price move could use up that deposit before charges. You may receive a margin call or be closed out earlier. Larger adverse moves can leave you owing more than your deposit. This is a simplified example, not the current margin rate.
Daily settlement and price limits
- Marked to market every day: gains and losses are settled daily, not only when you close the position.
- Price limits: some contracts have daily limits, for example the 1 tola contract’s specification lists a limit of 5% above or below the previous settlement price, unless the exchange decides otherwise.
- Expiry: every contract has an end date. If you do not close your position before it expires, it will be settled according to the contract’s rules, so know the expiry of the contract you trade.
Key risks of trading gold on PMEX
Gold futures are not suitable for everyone. Before you start, understand these risks:
- Leverage risk: losses can be larger than your initial deposit.
- Price volatility: gold prices can move sharply on global news, interest-rate decisions, inflation data and geopolitical events.
- Currency risk: for ounce based contracts, changes in the dollar rupee rate affect your returns.
- Margin calls: if the market moves against you, you may have to add funds quickly, or your position may be closed.
- Overnight and long hour trading: the market is open for most of the day, so prices can move while you are asleep or busy.
- Contract expiry: you must manage your positions before the end date.
- Fraud risk: be careful of unlicensed “online gold trading” schemes that promise guaranteed profits. Only trade through a broker that is registered with the exchange and regulated in Pakistan.
How to trade gold on PMEX: step-by-step
- Learn the basics. Understand futures, margin and the contract you plan to trade before you put in any money.
- Choose a licensed broker. Make sure the broker is a member of PMEX and licensed by the SECP.
- Open a PMEX account. Submit the required identity and bank documents and complete verification with your selected broker. A PMEX commodity account is separate from a PSX share trading account. For commodity account assistance, contact Pine Capital directly; our separate PSX account-opening guide explains the securities route.
- Deposit margin directly with PMEX using its official funding process from your registered bank account. Follow the verified instructions provided for your PMEX account and retain the payment record. Do not transfer margin to a broker employee or personal account.
- Practice first if you can. Some brokers offer demo access, which lets you learn the platform without risking money.
- Start with a small position. Choose the smallest contract that suits you and risk only money you can afford to lose.
- Use stop loss orders. They can help limit losses, though they do not guarantee an exit price in fast markets.
- Monitor your positions. Check your margin balance and the contract’s expiry date regularly.
Before you trade gold on PMEX: tips for beginners
- Do not trade with borrowed money or money you need for daily expenses.
- Decide in advance how much you are willing to lose on a trade.
- Do not follow “tips” from social media or messaging groups.
- Keep a record of your trades and review them.
- Learn how global news affects gold, for example US interest rate announcements and inflation figures.
- Keep your account login details private.
Frequently asked questions
Is gold trading on PMEX legal and regulated?
Yes. PMEX is licensed and regulated by the SECP, and trades must go through registered brokers.
Do I get physical gold when I trade on PMEX?
That depends on the contract. Ounce-based examples discussed here are cash-settled in rupees. The published one-tola specification provides for gold balances and physical withdrawal in 10-tola bars or multiples, subject to its rules. Confirm delivery obligations and deadlines before opening a position.
How much money do I need to start?
It depends on the contract and on the margin the exchange and your broker require at the time. Ask your broker for the current margin for the contract you want.
Can I lose more than I invest?
Yes. Because futures use leverage, losses can exceed your initial margin, and you may be asked to add funds.
What are the trading hours?
Trading sessions, holidays and expiry-day cut-offs can vary by contract and exchange notification. Check the current PMEX schedule and the specification for your exact contract before trading.
What is the difference between PMEX gold and buying gold from a jeweller?
Buying gold from a jeweller normally gives you physical metal. On PMEX, you trade an exchange contract with its own margin, daily settlement and expiry rules; physical delivery depends on the contract.
Is gold futures trading allowed in Islam?
Scholars hold different views on futures and margin trading. If this matters to you, ask a qualified Shariah scholar before you trade.
Can beginners trade gold on PMEX?
A beginner can apply for an account, but should first understand leverage, margin calls, settlement and expiry. Gold futures may be unsuitable for an investor who cannot monitor positions or meet potential additional funding requirements.
Trade gold on PMEX with Pine Capital
To trade gold on PMEX through Pine Capital Management (Pvt.) Ltd., contact the Islamabad team about account opening, currently available contracts, margins and charges. The team can guide you through the applicable documents and verification process.
Risk disclosure: Trading futures on margin involves a high level of risk and may result in losses greater than your initial deposit. Prices can move quickly and unpredictably. Returns are not guaranteed. This article is for general information only and is not investment, Shariah, tax or legal advice.
Sources and contract checks
PMEX: funding, account process and product information
https://pmex.com.pk/
PMEX: published 1-ounce gold specification
https://www.pmex.com.pk/wp-content/uploads/2019/09/PMEX-1-Ounce-Gold-Futures-Contract-Specification.pdf
PMEX: published one-tola gold specification
https://www.pmex.com.pk/wp-content/uploads/2019/09/PMEX-One-Tola-Gold-Futures-Contract-Specification.pdf
