If you’ve ever wondered how precious metals trading works, then a gold futures contract is an excellent entry point into this topic. Essentially, these are forward contracts where gold serves as the underlying asset.

To start trading, you need to open an account with a broker. Profit or loss is generated from the difference between the entry and exit prices. If you hold the contract until expiration, physical delivery of gold will take place. The entire system is built around several key parameters: the margin coefficient, the delivery month, the minimum price increment, daily movement limits, and the delivery method.

In practice, the most well-known contract is “New York Gold” on COMEX (New York Mercantile Exchange). It’s essentially the king of the gold futures market—the largest and most liquid in the world. Interestingly, the exchange itself does not participate in trading; it simply provides the platform, sets the rules, and monitors the fairness of transactions. It works like an electronic order-matching system, similar to stock trading.

The standard COMEX contract is 100 ounces of gold with 99.5% purity. There is also a mini version of 50 ounces, with a minimum price step of $0.25 per ounce. Trading runs for almost round-the-clock hours—23 hours a day, except on weekends. The only break is from 5:15 to 6:00 a.m. local time, when settlement is conducted.

The Shanghai Futures Exchange offers its own gold futures variant with different terms. Here, one contract equals one kilogram. The key feature is that they provide margin trading with leverage of approximately 7 times. The minimum price step is 0.02 yuan per gram, and the minimum margin is 8% of the contract’s value. Trading is divided into a day session and a night session, with a T+0 scheme supported and two-way positions allowed. However, during significant market fluctuations, requirements may temporarily change.

Overall, a gold futures contract is an instrument that requires understanding all these nuances. Each exchange has its own rules of the game, so before you start, it’s worth familiarizing yourself specifically with the system you plan to work with.