There are various methods to generate profits from trading gold assets. Investors usually utilize physical gold as a long-term investment strategy, while short-term investments can be made through gold futures contracts.
Gold futures contracts are contracts that are traded on exchanges. Buyers and sellers agree to long or short positions on gold for a specific future date at a price that may differ from the current gold price. There are two ways to settle gold futures contracts: physical metal delivery or financial settlement that compensates for the price difference of the metal at execution and contract expiration. Buyers earn a profit if the gold price increases, while sellers earn a profit if the gold price decreases.
Besides gold futures contracts, other financial instruments, like options and gold-based bets, are available, but gold futures contracts are the most popular trading instruments due to their liquidity and ease of trading before the expiration date.
The minimum deposit needed to enter the gold futures market varies depending on the contract traded, profit goals, and risk management strategies. For instance, trading one standard series of gold shares on the exchange requires a deposit of about $2,000 for a minimum position of 0.001 series. However, this amount does not include reserve funds for potential losses. Compared to forex providers, stockbrokers usually offer lower leverage, with an average leverage of up to 1:20 on the exchange.
E-Mini contracts are an alternative to standard series, with a size that is 0.1 of a standard series. The minimum deposit required to trade E-Mini contracts on the exchange is the same, ranging from $1,000 to $2,000.