Invest in Commodities through Gold Futures Contracts

By Amine Bouchentouf

Gold futures contracts give you a direct way to invest in gold commodities through the futures markets. You can choose from two gold futures contracts that are widely traded in the United States:

  • CME/CBOT Mini-Gold (CBOT: YG): Launched in 2004, this gold contract, trading in the CBOT section of the Chicago Mercantile Exchange (CME), is a relative newcomer to the North American gold futures market. However, it’s a popular contract because you can trade it online through the CME’s electronic trading platform.

    In addition, at a contract size of 33.2 troy ounces, the mini is popular with investors and traders who prefer to trade this smaller-size contract than the larger 100-ounce contract.

  • CME/CBOT E-Micro Gold (CBOT: MGC): Launched in 2010, this gold contract trades on the COMEX section of the Chicago Mercantile Exchange (CME). The contract is relatively new, and popularity has been growing each month with its electronic execution traded on the CME Globex platform.

    At a contract size of 10 troy ounces, the E-Micro is popular with investors and traders who prefer to trade a smaller size contract than the Mini-Gold 33.2 troy ounce.

  • CME/COMEX Gold (COMEX: GC): The COMEX gold futures contract was the first such contract to hit the market in the United States (back in the 1970s). It’s traded on the COMEX division of the CME, and it’s the most liquid gold contract in the world. It’s used primarily by large commercial consumers and producers, such as jewelry manufacturers and mining companies, for price-hedging purposes.

    However, you can also purchase the contract for investment purposes. Each contract represents 100 troy ounces of gold.

When investing in the futures markets, always trade in the most liquid markets. Liquidity is an indication of the number of contracts traded on a regular basis. The higher the liquidity, the more likely you are to find a buyer or seller to close out or open a position.

You can get information on the volume and open interest of contracts traded in the futures markets through the Commodity Futures Trading Commission (CFTC) website.