Gold Futures: What Are They?

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Gold Futures: What Are They?

Gold futures is a contract between two parties that can be transferred to a third party, to trade gold under particular conditions. These are financial speculation products rather than real investments, although the profit margins of each session can be very high. In a gold futures contract, both parties agree to purchase and sell a specific quantity of gold on a defined date, which is usually more than three months away, at a certain price: which is the value at which the future on gold is quoted at the time of entering into the contract. We said that the contract can be transferred to third parties, this is because it is a binding contract that cannot be canceled but can be sold and this is the only way to be free of it.

When the gold futures contract is settled, it can be done in the form of financial assets

This can be through a stock market movement or through a broker. Other assets are associated with physical delivery of the gold product, which may be more complex to finalize if those assets are a long distance from the investor. The gold futures are usually traded at Comex. What is Comex, you may ask. This is the main metal futures trading exchange, which can be gold, silver, aluminum and copper. Its name is Commodity Exchange, Inc. also known as “Comex”. It was founded in 1933, however the first future on gold was made on December 31, 1974, after the lifting of the ban on the private possession of gold.

Is the price of gold futures related to that of physical gold?

Just as demand for the metal soars with investors seeking a safe haven from unprecedented economic turmoil, a glitch has surfaced in the global market. The price of gold in New York and London has diverged in most cases after the invasion of Ukraine by Russia strangled the supply routes that allow physical gold to move around the world. Silver and other precious metals markets are also being disrupted by the logistics blockade. At issue is whether there will be enough gold in New York to fulfill gold futures contracts traded on Comex, which is owned by CME Group Inc.

Do you want to buy gold?

Although trading in gold futures is profitable, many investors find it more convenient to buy physical gold. As such, they have started turning their attention to the high-quality gold bars, raw physical gold, and the gold dust in East Africa. Any investor wishing to buy gold from the Democratic Republic of Congo can now partner with us. Feel free to contact us for more details on how you can do so.

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