In reality, most gold futures brokers instantly close the contract trade on your behalf prior to expiration, unless you specifically notify them to the contrary. Whether You Can Try This Source hold a gold futures contract to expiration or trade it ahead of time, most gold futures agreements are cash settled this suggests that all transactions are on paper, the trading takes place in responsibility rather than physical possessions.
For instance, if you are bullish on gold and think that the cost of gold will increase in the agreement duration, you could be the gold futures buyer and consent to buy gold at the point of agreement expiration for the present gold futures cost. If your projection is appropriate, you will profit since the agreement will have become more valuable and you can sell it for a higher cost than you purchased it for.
As the seller, you will profit if gold drops since you might purchase the gold back for a more affordable cost in the future. Why sell speculative gold futures? The significant advantage of gold futures agreements is that they are traded on 'margin'. This means that just a fraction of the value of the agreement needs to be paid up front, similar in idea to a down payment.
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