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Gold futures definition
Gold futures are standardised contracts to buy or sell a set amount of gold at an agreed price on a specified future date. They trade on regulated exchanges and let participants lock in a price ahead of delivery.
Each contract covers a fixed quantity, such as 100 troy ounces, and settles either through physical delivery or in cash. Traders use futures to hedge against price moves or to speculate, and most close their positions before the delivery date rather than take the metal.
The cousin is spot gold, the price for immediate delivery. Futures typically trade at a small premium to spot to reflect storage and financing costs over the contract's life, and that gap narrows as the contract nears expiry.
Gold futures Example
You buy one gold futures contract covering 100 troy ounces at an agreed USD 2,360 per ounce, expecting prices to rise before expiry. The market moves to USD 2,400 and you close the position.
Your gain is: (2,400 - 2,360) √ó 100 = USD 4,000
If the price had fallen to USD 2,320, the position would lose USD 4,000. These prices are illustrative.
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