Gold Futures

Gold Futures Market

Gold futures are a commodity futures product in the precious metals futures group. Few markets have the allure of gold; the yellow metal has long been viewed as a store of wealth — a “hard” currency that retains or gains value in times of inflation — and a symbol of prosperity. China, South Africa, the U.S., Australia, Canada, Indonesia and Russia collectively represent the backbone of global gold production.

What Are Gold Futures?

Gold futures are an agreement to trade a specified amount of gold for a specified price on a predetermined future date. A gold futures contract is often used by traders to hedge against inflation, as a speculative play, or to expose themselves to another asset class aside from regular equities and indices. Some brokerages, like RJO Futures, offer physical delivery of gold contracts, but more often than not, most contracts don’t reach the point of physical delivery.

How Do I Invest in Gold Futures?

Traders can invest in gold futures through the CME and NYMEX. In order to invest in gold futures, you must buy a gold futures contract. The easiest way to go about buying a gold futures contract is using an experienced Senior Market Strategist. Gold futures contracts are large, each contract gives you leverage over 100 troy ounces of gold, and therefore have a lot of capital risk. For that reason, it is best trade gold futures under the guidance of a futures broker to help coach you along the way.

How Much is a Gold Futures Contract?

While the actual price of a gold futures contracts changes everyday, the mechanics of the contract do not. A gold futures contract is always for 100 troy ounces of gold, with a minimum tick of $.10/tick and dollar value of $10/tick. Gold futures are traded Sunday-Friday 5:00 p.m.-4:00 p.m. CST with a 60-minute break each day at 4:00pm. As mentioned above, a gold futures contract is for 100 troy ounces of gold and is tracked in dollars and cents per ounce. However, when purchasing a gold futures contract, the trader will only have to put up a fraction of the total value of the contract, this is called margin. So, for example, lets say that gold is trading at $1,700 per ounce. That means the value of a gold contract would be $170,000. However, the trader would only have to put up a small fraction of that $170,000 to allow them to control that full 100 ounces of gold. This is called leverage, you can control a large quantity of gold for a fraction of the price, and it is one of the largest benefits to trading gold futures.

Should I Invest in Gold Futures?

Investing in gold futures is not always right for everybody, but for a lot of people it can provide a good and safe investment. One of the reasons to invest in gold is the upside availability in times of uncertainty. During volatile times, investors often flock to precious metals like gold because it has always maintained its value over the course of history. While it may experience volatility in the short-term, gold is usually a very safe long-term investment, which is why is popular and seen as “safe” during times of economic uncertainty.

Where Can I Trade Gold Futures?

You can trade gold futures on the CME through RJO Futures. Unlike many brokerages, RJO Futures offers physical delivery on gold contracts allowing investors to accept real gold upon expiration of their contract. Of course, you don’t have to order physical delivery on your contract, but the option is there for you. To get started trading gold futures, please contact one of our Senior Market Strategists and check out our Free Gold and Silver Investor Kit.

Gold Futures Facts

Gold futures offer a far more liquid and efficient marketplace than the physical gold market for taking positions in gold. Central banks and the International Monetary Fund play an important role in the gold price, as do global events and the price of oil futures and the U.S. dollar. Significant economic reports from around the world also impact the price of gold futures, such as quarterly GDP reports, Import/Export data, and in the U.S., monthly Employment Reports. Gold futures are considered a flight-to-quality investment, much like oil.

Gold Futures Trading

Gold futures are traded at the following exchanges:

• COMEX (the largest Gold Futures exchange by volume in the world)
• Chicago Mercantile Exchange (CME)
• India National Commodity and Derivatives Exchange (NCDEX),
• Dubai Gold and Commodities Exchange (DGCX),
• Multi Commodity Exchange (MCX)
• and Tokyo Commodity Exchange (TOCOM)

COMEX Gold futures are delivered every year in all months. Worldwide gold production continues to underperform against worldwide demand. At the current level of production, it is assumed that worldwide gold supply will not be able to meet the demand.

You can learn more about Metals futures by downloading our guide, Gold and Silver Investor Kit

Gold Futures Contract Specifications