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Risks and Reasons to Trade Gold Futures

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What to Know to Trade Gold Futures

trade gold futures

Learning to trade gold futures can be difficult. Futures differ from typical trading on the stock market, and require different knowledge to trade them successfully.  Trading gold futures is a great way to capitalize on the value of gold without making a huge investment.

Gold prices

The value of gold has shown impressive growth in the last 10 years. Prices are currently more than $1,900 per ounce. Analysts expect the value to rise to at least $2,000 per ounce before the end of 2011. The market is looking bubblier due to the recent growth, however. The gold market, like any other sector, is a risky place. Although a new milestone is not cause for immediate alarm, the spike in value is making some investors and experts nervous. Gold has risen from $1,400 an ounce at the start of the year. Prices vaulted from $1,800 an ounce to $1,900 in only about 2 weeks.

Incentives to Trade Gold Futures

If gold values are so risky, you may wonder what reasons that there are to trade gold futures. The gold market is still on track to continue rising. One of the benefits of trading futures is that you may buy and sell them on a short-term basis. Investors can sell their futures before the expiration of the contract, and then buy new contracts to profit from falling prices. The higher liquidity of the assets means you have a more reliable real-time price than available with the OTC bullion market. You also need much less money to get involved in trading gold futures.  Futures are bought and sold for a fraction of the metal’s actual value.

Gold has become a precarious investment to some thanks to this recent unprecedented jump in value. Gold prices are inching very close to the predicted mark of $2,000. There is still time for savvy investors to trade gold futures and profit greatly from it.

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