How Does the Gold Futures Market Work?

There are basically two markets for gold and silver bullion. Assume for the purposes of this discussion assumes that the functions of the money market in a manner quite similar to an analogy of the gold market. Let's dive into the differences between silver and gold market in a later article.
The two main markets, which determine the price of gold spot market and futures market. The spot market is the market where the gold for immediate delivery operations. Happens in spite of its name, and not all transactions in the cash market has a physical exchange of goods, but who has access to the spot market, should be able to take delivery of gold on request.

The gold market is the futures market or on a date in the future. Trading in gold futures on the COMEX (Commodities Exchange) in New York, now part of CME Group (Chicago Mercantile Exchange). The gold futures contract is used by institutions and speculators. A futures contract is to provide a standard agreement or receive a certain quantity of gold at a certain point in the future. COMEX gold futures contract specifies delivery of 100,995 ounces of gold. The notional value of contracts at a current price of an ounce of gold is $ 139,000.00 USD 1390/Troy. (An imperial ounce = 28.35 grams = one troy ounce of 31.10 grams traditional)
Early November 2010, CME launched a new gold futures contract, e-microphone. E-Micro is the same as traditional futures contracts in gold, except that it trades a fictitious 10 ounces troy. If you and the delivery of this contract, 10 oz gold changes hands. E-Micro as a fraction of the traditional gold futures contracts can be viewed as e-10 microns corresponds to a traditional contract.

The contract allows a trader takes a position that has a higher gold prices or a decline in prices. Futures contracts are designed to be uniform and may be long or short. If you are long, so the purchase of gold, with production and profits when the price rises. If you sell a contract in gold and "short" when actually sell them gold. If the price falls, then you can again buy gold for less than they paid. It is "buy low, sell high", but in the opposite direction.

Futures markets. The participants try to anticipate the price of gold at the end of the contract and will invest accordingly. The futures price of a product is on the price expectations and interest rates. The interest rates because the opportunity cost of investing the money in a future contact. Money is not an income interest in a bank account so that the opportunity cost is a factor in the price of gold futures market. Because interest rates are low and only a fraction of the cost factor for our purposes we can ignore the impact of interest rates.

Although futures contracts, physical delivery of 100 troy ounce of gold, most contracts are closed prematurely write the presentation and not the gold standard is to change physically. Even among the largest consumers of gold traders and investors who traded most gold by electronic transfer, during the capability behind several layers of security at major banks, institutions and is also put on the roof protected. If you take delivery of a contract in gold, a gold medal reality is controlled by a repair depot.