Gold futures contracts – your way to trade gold
Gold is a precious metal used for jewelry making, and to a certain degree for certain industries, but the essence of this precious metal is as a means for financial investment, states IronFX. Gold futures serve as the central means for financial investors trading gold, conducted via world commodity markets by certified brokers. This metal can be traded not only using futures but with exchange-traded funds, indices, or shares in relevant companies.
A means for defensive and speculative investing
As IronFX stated, gold is barely used today for industrial purposes and comprises less than 2% of the entirety of annual world commodity trade. But, as a financial tool, it’s alive and kicking, and gold trade turnover comprises tens of percentages of the commodity market’s entirety. Gold has traditionally, largely justifiably, been perceived as a defensive asset during times of crisis and a means for hedging world inflation. Thus, for example, when the US dollar is weak, gold usually gets stronger, says IronFX. Further, since the 2008 financial crisis, gold has broken significant price records – over $1,500 an ounce. Of all the commodities, gold is the most exchangeable, and the sum of deals therein is significantly larger than the sum of physical gold reserves that actually exist on earth, explains IronFX.
So, in terms of gold prices and activity on the “glittery” gold futures market, prices are very much influenced by various parties’ speculative activity, as well as investor’s moods – since, in times of financial uncertainty, there is a traditional rush for gold, which is perceived as a financial anchor or “solid ground”. Of course, other than countries and large financial institutions, investors do not hold the physical gold, and investing in the metal is conducted using coverage such as ETFs, trust funds, and shares in industrial companies, or investing via certified brokers using a CFD (contract for differences).
GOLD FUTURES TRADE
The futures market comprises the crux of financial activity for commodities. Gold futures, when executed directly on commodity markets, are regulated by physical delivery of the gold, although large financial entities carry out futures transactions without dealing with the goods physically, of course. Standard gold futures are of a set size, 100 ounces, and an e-mini is 33 ounces. Minimal volatility on a standard or e-mini contract is 10 US cents an ounce, which means a $10 minimal change on a standard contract or $3.3 for an e-mini, in either direction, explains IronFX.