Thursday, May 23rd, 2019

All About Futures For Gold: The Participants And Where Gold Futures Contracts Are Traded


At the higher end of the risk spectrum is the opportunity to trade futures on gold. The gold futures market trades on NYMEX in the US. Spot gold futures contracts require the individual trader and investor to post margin to establish a position. If you believe the price of gold is going to rise then you go ‘long’. Conversely, if you believe the price of gold is going to decline you enter into a short position. The margin requirements for futures for gold are posted on the exchange website and vary depending on the prevailing market volatility.

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Who trades futures on gold?

There are many different participants in the gold futures market. Some are commercial producers that are hedging their operations whilst other participants are establishing speculative based positions hoping to profit from their view on whether the price of gold is going to rise or fall. Hedge funds, investment banks and large speculators all trade gold futures. The players all have different time horizons, expectations and use a range of techniques to come to the conclusions they do before entering a position. Some operators are purely fundamentally based whilst other rely on technical indicators. There is even a mixture of hybrid styles which are employed.

Why participate in the gold futures market?

One of the advantages of trading gold futures contracts is the leverage. A small price movement can translate into a large gain if several contracts are being used. Individuals and corporations who have the capital and can manage risk choose to use the futures markets. The available liquidity in the gold futures market makes it relatively easy to enter into and out of positions. For short term price movements, futures on gold are ideal because you can enter and exit the market very quickly to take advantage of market volatility or price movements.

How to learn more about the gold futures market and how gold futures are traded

The NYMEX website provides additional details on spot futures contracts including contract month data, margin requirements and educational material. There are strategy guides under the educational section of the site for individuals who would like to learn more about futures and options contracts. The exchange also hosts regular seminars on a range of different topics including technical analysis. To learn more about these options, visit If you are looking to participate in the gold futures market then a simulator is an ideal way to go. You can test out your strategies without committing funds to refine your approach and gain confidence in your method.

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