Gold futures quotes are followed by people when they want to enter contracts, where they either sell or buy gold, at a price that has been agreed upon. The date of the contract is set at some point in the future. These gold futures are used by people to hedge products against market’s drastic fluctuations. They are also used by speculators, which use market movements to make money with them.
The market of gold futures is one of the largest in the world, where many investors choose to do business. This is also the place that people go to when they see that the larger market suffers. Investors find the gold market quite attractive, partially because they can win large amount of money by using the gold market. This is because with small movements in the market one can get big financial gains.
When someone invests in gold futures, they basically promise to somebody else that you will purchase or sell certain gold amounts, at some point in the future. One example is when you think that the gold price will increase at some point in the next few months. You could invest $1000 in gold, at the price of $500 per ounce. If the price increases to $800 for one ounce, you can make a profit of $600. The profit is not bad but it’s not impressive either.
The thing is that when they buy gold futures at a margin, people can use the money for investments. The buyer will need to put down a percentage of the total sum, usually varying between 20% and 2%, but that depends on the amount of gold from the contract. If the market is average, the margin will be at 5%, so you can use $1000 to buy gold worth $20,000. If the gold price grows from $500 to $800, the profit will be $12,000, and your investment would’ve been only $1,000.