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Gold Futures Trading Basics
Gold futures are standardized, exchange-traded contracts in which the contract buyer agrees to take delivery, from the seller, a specific quantity of gold (eg. 100 troy ounces) at a predetermined price on a future delivery date.
Some Facts about Gold
Gold is a soft, dense, shiny and highly attractive bright yellow metal. Since thousands of years ago, gold has been used to fashion ornaments and jewelry. Gold is also the ultimate store of value. Buying gold as an anti-inflation hedge is the primary use of gold today. [Click here to learn more about Gold and it's other uses...]
Gold Futures Exchanges
You can trade Gold futures at New York Mercantile Exchange (NYMEX) and Tokyo Commodity Exchange (TOCOM).
NYMEX Gold futures prices are quoted in dollars and cents per ounce and are traded in lot sizes of 100 troy ounces .
TOCOM Gold futures are traded in units of 1000 grams (32.15 troy ounces) and contract prices are quoted in yen per gram.
| Exchange & Product Name | Symbol | Contract Size | Initial Margin |
| NYMEX Gold Futures (Price Quotes) | GC | 100 troy ounces (Full Contract Spec) | USD 4,302 (approx. 5%) (Latest Margin Info) |
| TOCOM Gold Futures (Price Quotes) | - | 1000 grams (Full Contract Spec) | JPY 135,000 (approx. 5%) (Latest Margin Info) |
Gold Futures Trading
Consumers and producers of gold can manage gold price risk by purchasing and selling gold futures. Gold producers can employ a short hedge to lock in a selling price for the gold they produce while businesses that require gold can utilize a long hedge to secure a purchase price for the commodity they need.
Gold futures are also traded by speculators who assume the price risk that hedgers try to avoid in return for a chance to profit from favorable gold price movement. Speculators buy gold futures when they believe that gold prices will go up. Conversely, they will sell gold futures when they think that gold prices will fall.
Related Articles
- Buying Gold Futures to Profit from a Rise in Gold Prices
- Selling Gold Futures to Profit from a Fall in Gold Prices
- Gold Options Basics
- Gold Call Option Trading Basics
- Gold Put Option Trading Basics
- Hedging Against Rising Gold Prices with Gold Futures
- Hedging Against Falling Gold Prices with Gold Futures
How to Start Trading Gold Futures
To buy or sell gold futures, you need to open a trading account with a broker that handles futures trades. Most online brokerages out there only deal with stocks and stock options. Only a few such as optionsXpress lets you trade futures and futures options as well. optionsXpress also provide a virtual trading platform where beginners can try out futures and options trading in real market conditions without using real money.
