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Futures are highly specific and detailed contracts to buy or sell; they include quantity, quality, sale date, and sale price. Futures contracts are exchanged in a limited number of places. This includes gold futures, as well.

There are two positions in a futures contact: long and short. The long position is the purchaser of the asset. The party that agrees to sell the asset in the future is in the short position. The underlying asset is owned by the party in the long position. They will produce a profit if the price of the futures contract increases. If the asset price declines during the contract term the party in the short position benefits.

What are gold futures?

Futures contracts can be based a multitude of things: commodities, interest rates, securities, etc. Examples of commodities include: natural gas, beef, oil, copper, and gold. All futures related to gold are called gold futures.

Futures are sold in standardized sizes and are detailed in the contract.

Details For Gold Futures Contracts

Gold futures are sold on two exchanges. Available on a division of the New York Mercantile Exchange (NYMEX) known as the Commodity Exchange (COMEX): 100 troy ounces, and available via electronic trading on the Chicago Board of Trade (eCBOT): 100 troy ounces and a mini contract of 33.2 troy ounces.

There are three ways to trade futures:

1. You: Trade without assistance or input from a broker. This involves the most risk.

2. Broker: Your broker has the right to trade for you, based on the conditions your set. You remain responsible for all calls.

3. Group: Invest in a group of commodities through a commodity pool. Like a mutual fund, monies of numerous traders are combined and then traded as a combined unit. This is the only method that does not leave you open to margin calls.

Gold futures are, of course, extremely risky. If you’re wrong about your predictions, you could lose your shirt. For most investors, gold coins or gold stocks are probably a better call.