Precious metals have been some of the most popular hard commodities to trade since the 1970s. Besides Foreign Exchange trading, trading and speculating on gold, silver and other precious metals is a worldwide popular way of hedging and managing risks during high inflation times or during global economic or political tensions.

Besides being a safe heaven, one of the main purposes of trading precious metals futures is risk management, since contract buyers and sellers can fix prices or rates in advance for future transactions. They can ensure against drastic or sudden price movements that may cause increased losses. The price of gold and silver futures derivatives comes from the performance of the underlying asset for that particular future contract.

Precious metals can be traded in both directions. If a metal’s price is expected to move upwards, traders can enter by purchasing a futures contract and exit the trade by selling it. Similarly, if there is an anticipation of a downward movement, traders can enter in a sell futures contract and exit the trade by buying this contract back again.