What is the difference between gold futures and spot?

gold futures

Investors who speculate in gold probably know that gold futures and gold spot are two completely different investment methods. However, most investors can't tell the difference between the two investment methods. Today, I'll give you a brief introduction of the differences between the two investment methods.

1、 Different concepts

Spot gold: spot gold is also called international London gold. London gold is not a kind of physical gold, but the name of a gold trading method. Spot gold is just a kind of virtual book transaction, without physical delivery, it can not extract physical gold, investors only earn the price fluctuation difference of gold through trading. London gold is priced in US dollars and measured in British ounces.

Gold futures: gold futures belong to a variety of futures. The so-called futures refers to the futures contract, which is a standardized contract formulated by the futures exchange to deliver a certain amount of subject matter at a specific time and place in the future. Gold futures is a kind of futures contract whose trading target is the price of gold in the international gold market at a certain time in the future. The profit and loss of investors in buying and selling gold futures is measured by the gold price difference between the two periods of entering and leaving the market. After the contract expires, it is physical delivery.

2、 Different trading rules

Spot gold is traded by market traders. Investors can buy or sell it at any time. However, gold futures are matchmaking transactions. When the big market comes, delivery may not be possible, which increases the risk of investors to a certain extent.

3、 Different leverage ratios

The leverage ratio of spot gold is 1:100. As long as you pay a deposit of US $1000, you can do first-hand trading. However, gold futures need much more capital, so the corresponding risk is great.

4、 Trading hours are different

Spot gold is composed of U.S. market, Asian market and European market. Its trading time is 24 hours a day, and investors can trade at any time of the day. However, the trading time of gold futures is limited. The trading time of gold futures on the domestic Shanghai Stock Exchange just missed the opportunity of the European and US markets where the gold price fluctuated the most.

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