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One of the primary attractions of gold futures for investors is the ability to speculate on gold prices.

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Amid economic uncertainty and fragile inflation, many Americans are reviewing their investments and planning their next move. An investment asset you can consider is gold, which comes with Numerous benefits.

For example, gold is often seen as a Hedge against inflation, as the value of the dollar tends to rise when it falls. Another advantage of gold is that it can Your portfolio is diversified. Generally, gold prices have an inverse relationship with the stock market, so if some of your stocks go down, you can cover your losses with your gold holdings.

You can invest in gold in various forms, such as gold bars and coins, Gold IRA, and mining company stocks. Another investment option is gold futures. In this article, we will dive deep to understand how these assets work, their benefits and how to trade them. If you think you could benefit from investing in gold, get started by requesting a free information kit to learn more.

What a golden future

Gold futures are a legal contract between a buyer and seller to exchange and take delivery of a specified amount of gold at a predetermined price and date. One of the primary attractions of gold futures for investors is the ability to speculate on gold prices.

As a buyer, you agree to take delivery of a predetermined amount of gold on a specified date. But investors who buy gold futures usually sell before expiration. In this situation, you can’t actually take possession of gold because trading the contract enables you to capitalize on price fluctuations before the contract’s expiration date.

Because gold is known to be a reliable store of value, many investors purchase futures contracts as a hedge against inflation. Additionally, some companies that manufacture products with gold components may invest in gold futures to lock in the price of the yellow metal.

Advantages of Gold Futures Trading

Gold futures come with many investor benefits, such as:

  • At low prices: Generally, you can trade a gold futures contract at a significantly lower price than trading gold price.
  • “Call” or “Put” Contract: Calls and puts allow investors to trade futures on whether they think the price of gold will rise or fall.
  • Strong Liquidity: You can trade gold futures almost 24 hours a day, six days per week.
  • Trading on Margin: Many gold futures contracts allow you to trade on margin, giving you leverage for higher returns. Be aware that trading this way can backfire and result in you owing more than the original purchase price.

If you think these gold options sound beneficial, start by requesting a free information kit to learn how to get started.

How to Trade Gold Futures

If you want to invest in gold futures, you will need a brokerage account that allows futures trading. Gold futures traded on the COMEX division of the New York Mercantile Exchange (NYMEX) are standardized with common features, such as:

  • Amount of gold specified: Contracts are usually sold in units of 100, 33.2 or 10 troy ounces.
  • Set Delivery Date: Specifies the date when the contract begins.
  • Default Expiry Date: The contract usually ends on the day you can trade the contract.
  • Minimum Price Fluctuation: These are known as ticks, which are set by the exchange and vary by contract. Understanding the value of ticks can help you determine how much you can potentially lose in an hour or day to help you determine the risk of a futures contract.
  • Specific Trading Months: Gold futures contracts usually close in February, April, June, August, October or December.

Once you’ve signed up with a brokerage account that allows you to trade futures, you simply fund your account and use it to start buying gold futures, just as you would with traditional stock purchases through a brokerage.

Bottom line

Gold futures can benefit anyone looking to diversify their portfolio or those looking to lock in gold prices. You can also take advantage of gold futures to profit whether the price of gold is rising or falling. If you are experienced in trading futures, you may consider investing in gold futures to be able to trade with leverage.

As mentioned, the risks involved in gold futures are substantial, so they are not ideally suited for beginning investors Consult your financial advisor Before investing In gold futures. To get more familiar with gold, request a free information kit and learn more or use the table below to explore some gold investment options now.

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