Know About Gold Futures

Gold, as a commodity occupies a very important place in the hearts and minds of billions across the globe, with countries and individuals stocking up on this precious resource in a bid to secure their future. Today, it can be purchased and traded through different mediums at different gold rates, ensuring that one doesn’t have to physically store this precious metal. Gold Futures are one such popular way to indulge in gold trade, and while this term might not ring a bell for everyone, it is fast gaining pace in the country.

What are Gold Futures?

A future, in simple words, refers to a trading scheme in which a commodity is up for trade, with the amount decided presently but a settlement scheduled for a future date, i.e. the agreement is entered into but the gold will be given only on the future date. Gold Futures refers to a deal in which an individual agrees to take delivery of gold at a mutually decided upon date by making an initial payment, with the complete payment to be made as per an agreement. This trade is based on speculation, with an element of risk involved.

Example: Miss Rita has a keen interest in owning gold and decides to invest a portion of her savings in it. She chooses to buy 10 grams of gold from the futures market at an agreed price of Rs 5,600, with the delivery scheduled for August, four months from now. The current price of 1 gram gold is Rs 5,650 and when she takes delivery of the gold the price is Rs 5,675, thereby helping her save Rs 75 at current rates.