GIPHY / istock / getty

What Are Gold Futures?

Gold futures are standardized, exchange-traded contracts that commit a buyer and seller to a future sale. The buyer agrees to pay for a predetermined quantity of gold at a set date and price. The seller agrees to deliver gold at that amount, date and price.  

Understanding gold futures

Futures are legally binding, exchange-traded contracts. 

The buyer (or investor) agrees to purchase a set amount of the asset in question at the given price and date. 

The seller agrees to part with the asset (or pay cash value) under those same conditions.  

Each contract is standardized, meaning that the exchange sets the asset amount, the date it enters effect and the expiration date. 

What are gold futures?

Gold futures are futures contracts that deal in gold. 

Gold futures obligate a buyer to buy and receive a set amount of gold at a given price and date. In reverse, the seller has to hand over that amount of gold. 

In the U.S., gold futures mainly trade on the New York Mercantile Exchange (NYMEX). NYMEX gold futures close on the third-to-last business day every-other month. (February, April, June, August, October and December.) 

What are gold futures used for?

In a broad sense, gold futures help facilitate smooth transactions in the gold market. 

Essentially, signing contracts now guarantees that sellers will have buyers after the gold is produced or refined. On the buyer’s side, gold futures provide an opportunity to lock in prices before they fluctuate. 

Due to their liquidity and potential, companies and investors often turn to futures to hedge against price risks. Investors may take long or short positions (or both) in futures. Long investors hope gold prices will rise. Short investors hope gold prices will fall. 

Speculators can also bet on future price movements by taking the appropriate long or short position.

How do gold futures affect you?

To start trading gold futures, you’ll need to sign up with an eligible broker and fund your account. Then, you can make trades, similar to how you purchase stocks. 

Be sure to familiarize yourself with the broker’s policy on gold investments. Since many can’t securely ship or store gold, most investors “cash out” their futures. 

Pros of gold futures

Gold futures offer several benefits to investors, including:

  • Greater flexibility and liquidity than physical gold
  • Increased portfolio diversification
  • (Optional) margin trading for greater leverage
  • Trading 23 hours per day, 6 days per week
  • No need to store or insure physical gold

Cons of gold futures

That said, gold futures come with their own risks, like:

  • Price volatility
  • Potential default risk (e.g., when a miner can’t deliver bullion on time)
  • Increased risk of losing more than you invested (in margin trading)

Due to these risks, gold futures are often best suited to advanced investors who can afford to absorb potential losses. 

What this means for you

Gold futures make precious metal investing convenient and easy – but not riskless. 

That’s why’s Precious Metals Kit offers gold exposure and powerful diversification, all backed by up-to-date market data and weekly risk-adjusted portfolio rebalancing.  

That’s the power of investing with AI. 

Disclosures is the trade name of Quantalytics Holdings, LLC., LLC is a wholly-owned subsidiary of Quantalytics Holdings, LLC ("Quantalytics"). Quantalytics offers automated financial advice tools through Quantalytics Investment Advisors, LLC ("QAI"), an SEC-registered investment advisor. QIA’s investment advisory services are ONLY available only to residents of the United States. Disclosures concerning QIA’s investment advisory services are available on its Form ADV filed with the SEC. The content in this newsletter is for informational purposes only and does not constitute a comprehensive description of's investment advisory services.

Hands-free approach to investing

Our AI manages your money with commission-free, institutional-grade, AI-powered investment kits.