Gold is important to billions of people all over the world. Countries and people store this very important resource to protect their future.

Today, you can buy and sell gold at different rates through various financial channels, so you don’t have to physically store this valuable metal. Even though not everyone knows the word “gold futures,” it is quickly becoming more popular in the United States. Gold futures are a common way for people to trade in gold.

How Much is a Gold Futures Contract?

Even though the actual price of gold changes every day, the way a gold futures contract works stays the same, a gold futures contract is always for 100 troy ounces of gold, and each tick has a value between $.10 and $10. Gold futures are traded from 5:00 p.m. to 4:00 p.m. CST, with a one-hour break at 4:00 p.m. As was already said, a gold futures contract is worth dollars and cents per ounce for 100 troy ounces of gold. 

When a trader buys a gold futures contract, they only need to put up the margin, which is a small part of the contract’s total value. Take the price of gold, which is $1,700 per ounce. So, a gold contract is worth $170,000 because of this. But the trader would only have to pay a small part of the $170,000 to take possession of all 100 ounces of gold. One of the advantages of trading gold futures is that you can buy and sell a lot of gold for a low price. Leverage is the technical term for what we’re talking about here.

Gold Futures Facts

Gold futures offer a market for trading that is much more efficient and liquid than the actual gold market. The price of gold is affected greatly by world events, the price of oil futures, the US dollar, central banks, and the IMF. Import/export data, quarterly GDP numbers, and monthly employment statistics in the United States impact gold futures prices. Like oil futures, gold futures are seen as a secure investment.

Gold Futures Trading

Gold futures are traded at the following exchanges

• COMEX (the largest Gold Futures exchange by volume in the world)
• The Chicago Stock Exchange (CME)
• India’s exchange for goods and derivatives (NCDEX),
• Dubai is a place where people trade goods and gold (DGCX),
• Exchange of Several Goods (MCX)
• The Tokyo Commodity Exchange does the same thing (TOCOM)

Every month of the year, COMEX gold futures are paid out. The world’s demand for gold continues to be higher than its supply. At this rate, the amount of gold made worldwide won’t be enough to meet demand.

How to trade gold futures?

The New York Mercantile Exchange’s COMEX division is where gold futures are traded (NYMEX). The normal size of a contract is 100 troy ounces, but two smaller contracts are 50 and 10 troy ounces. The exchange says it will send gold to vaults in the New York area, but this can change. To trade gold futures, you need to get a futures trading account.

Why trade gold futures?

You can bet on gold futures or use them to protect yourself. Businesses that use gold as a raw material (like jewelry makers) can exchange it for locking in a price for the precious metal in the future. In the same way, traders and investors who want to bet on the future price of gold can use gold futures to take part in the market without having any physical gold to back them up and say what they think the price of gold will be in the future.

Benefits and risks of trading gold futures

Before trading futures, it’s important to know the pros and cons of gold futures. A major advantage of futures contracts is that they are open approximately 24 hours a day, seven days a week throughout the trading week, unlike traditional investments. 

Also, gold futures let traders use more leverage and better use their trading funds. When you trade leveraged products, like gold futures, this type of trading may not be right for all investors.