Gold futures is a kind of futures contract for gold spot. This is an important concept for investors to grasp when learning the fundamentals of futures.
Like other futures transactions, gold futures are contracts for delivery within a specified time and at a specified price. One of the characteristics of futures is that investors deposit a margin with a futures broker in advance in order to be able to buy a certain amount of gold. Generally, buyers and sellers of gold futures sell or buy back the same number of contracts as previous contracts to close out their positions before the contract expires, without the need for actual delivery of gold.
The trading of gold futures contracts only requires a small amount of margin as the investment cost, which is very leveraged. That is to say, a small amount of capital is used to promote large transactions. Therefore, the trading of gold futures is also called margin trading. These are all things that investors need to know about futures.
Advantages of investing in gold futures:
With good liquidity, the contract can be cashed in any trading day, which is T+0 trading.
With great flexibility, investors can enter the market at the right price at any time.
Variety of entrustment orders, such as instant trading, price fixing, etc. With quality assurance, investors no longer need to worry about the success of their contracts, nor need to bear the cost of appraisal.
Be leveraged and trade with a small down payment. Gold futures are marked at wholesale prices, giving them an advantage over retail and decorative gold prices.
The prices of futures traded in different regions and countries are basically the same as those in major financial and trade centers in the world under the conditions of opening-up.
Hedging is the use of buying and selling futures contracts of the same quantity and price to compensate for fluctuations in the price of gold.