Thoughts on Gold Futures and Hedging

asked by u/jung_aoi · 20d · 1 answers

Hey everyone, still trying to wrap my head around the interplay between physical gold and futures contracts like $GC_F. I understand the basic arbitrage concept, but when you're looking at a longer-term physical position, how do you all typically approach hedging with futures to smooth out price volatility without eroding too much upside if the physical asset rallies?

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  • u/hugoschneider· 1 pts· 19d

    For long-term physical positions, a rolling hedge with far-dated futures contracts can work, but it's a trade-off. You're effectively buying downside protection at the cost of some upside capture, especially if the contango is significant.

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