What are Metals Futures? A Beginner’s Guide

Metals futures are some of the oldest and most widely used contracts in the futures markets. From gold and silver to copper, these contracts allow traders and businesses to manage risk, speculate on price movements, or hedge against broader market volatility.

In this beginner’s guide, we’ll cover:

• What metal futures are and how they work

• Why traders and businesses use them

• The most popular metals futures contracts

• Standard vs. micro metals contracts

• Key benefits and risks

• How to start trading metal futures

What Are Metals Futures?

Metals futures are standardized contracts that let you buy or sell a specific quantity of a metal such as gold, silver, or copper at a fixed price for settlement at a future date. These contracts are traded on regulated exchanges, most commonly the CME Group.

You’re not buying or selling physical gold bars or copper coils. Instead, you’re trading the price movement of the underlying commodity.

Key takeaway: Metal futures let traders participate in the price action of industrial and precious metals without taking delivery or managing physical logistics.

How Metal Futures Work

Let’s say gold is trading at $2,000 per ounce. You think prices will rise, so you buy one futures contract.

• If gold rises to $2,050, you profit.

• If gold drops to $1,950, you lose money.

Each metal futures contract has specific characteristics:

• Contract size: Defines how much metal the contract represents

• Tick size: Smallest allowed price movement

• Tick value: How much each tick is worth in dollars

• Expiration date: When the contract settles

• Margin requirement: Amount you need to post to open a position

• Settlement type: Most are cash-settled on MetroTrade (no delivery risk)

Why Trade Metal Futures?

1. Speculation on Price Moves

Metal prices move in response to supply and demand, inflation expectations, interest rates, and geopolitical events. Futures allow traders to go long or short and profit from both rising and falling markets.

2. Hedging Material Costs

Manufacturers and industrial firms often use futures to lock in prices for raw materials like copper or silver. Likewise, metals producers use them to protect revenue against price drops.

3. Hedging Market or Currency Risk

Gold and silver are often viewed as safe-haven assets, meaning they tend to hold value during times of economic stress or currency devaluation. Traders use metals futures to hedge broader portfolio risk.

4. Leverage

Futures let you control large contract values with relatively low upfront margin. For example, a gold futures contract worth $200,000 may require only a few thousand dollars to trade.

5. Liquidity and Market Access

Contracts like /GC (Gold), /SI (Silver), and /HG (Copper) are actively traded and offer nearly 24-hour access, allowing traders to respond to global events in real time.

Popular U.S. Metals Futures Contracts

Here’s a breakdown of the most popular contracts available on MetroTrade, including both standard and micro versions:

Note: All contracts are cash-settled on MetroTrade and trade nearly 24 hours a day, Sunday evening through Friday afternoon. Margin requirements may vary based on volatility.

Gold Futures (/GC, /QO, /MGC)

Gold is the most actively traded precious metal in the futures market, widely seen as a store of value, inflation hedge, and safe-haven asset during times of market volatility.

Gold Futures (/GC)

• Contract size: 100 troy ounces

• Tick size: $0.10 per ounce

• Tick value: $10.00 per tick

• Example value: $200,000 (if gold is $2,000/oz)

These contracts are heavily used by institutional investors and professional traders for macroeconomic speculation and portfolio hedging.

E-mini Gold Futures (/QO)

• Contract size: 50 troy ounces

• Tick size: $0.25 per ounce

• Tick value: $12.50 per tick

• Example value: $100,000 (depending on the price per oz)

/QO offers a mid-sized option between the standard and micro contract, providing flexibility for active traders.

Micro Gold Futures (/MGC)

• Contract size: 10 troy ounces

• Tick size: $0.10 per ounce

• Tick value: $1.00 per tick

• Example value: $20,000 (depending on the price per oz)

/MGC is ideal for retail traders who want gold exposure with reduced capital requirements. It trades nearly 24 hours a day, Sunday through Friday.

Silver Futures (/SI, /QI, /SIL)

Silver combines industrial utility with safe-haven appeal. Its price tends to be more volatile than gold, making it popular among short-term traders.

Silver Futures (/SI)

• Contract size: 5,000 troy ounces

• Tick size: $0.005 per ounce

• Tick value: $25.00 per tick

• Example value: $125,000 (if silver is $25/oz)

Used for both industrial hedging and macro speculation, /SI is highly liquid and globally traded.

E-mini Silver Futures (/QI)

• Contract size: 2,500 troy ounces

• Tick size: $0.0125 per ounce

• Tick value: $31.25 per tick

• Example value: $62,500 (based on the price per oz)

/QI offers a lower-risk entry point than /SI, while maintaining exposure to price moves in the silver market.

Micro Silver Futures (/SIL)

• Contract size: 1,000 troy ounces

• Tick size: $0.005 per ounce

• Tick value: $5.00 per tick

• Example value: $25,000 (based on the price per oz)

/SIL gives smaller traders access to silver futures with manageable position sizes and tighter control over risk.

Copper Futures (/HG, /QC, /MHG)

Copper is a key industrial metal, used in construction, electronics, and infrastructure. Its price often tracks global economic health and industrial output.

Copper Futures (/HG)

• Contract size: 25,000 pounds

• Tick size: $0.0005 per pound

• Tick value: $12.50 per tick

• Example value: $100,000 (if copper is $4.00/lb)

/HG is popular among traders looking to gain exposure to industrial demand trends and macroeconomic growth.

E-mini Copper Futures (/QC)

• Contract size: 12,500 pounds

• Tick size: $0.002 per pound

• Tick value: $25.00 per tick

• Example value: $50,000 (based on the price per lb)

/QC offers a mid-size alternative with slightly larger tick value, commonly used by swing traders and copper hedgers.

Micro Copper Futures (/MHG)

• Contract size: 2,500 pounds

• Tick size: $0.0005 per pound

• Tick value: $1.25 per tick

• Example value: $10,000 (based on the price per lb)

/MHG enables small accounts to trade copper’s price swings with much lower margin and more granular position sizing.

Platinum Futures (/PL, /PLM)

Platinum is a lesser-known but highly valuable metal used in automotive manufacturing (especially catalytic converters), jewelry, and clean energy applications.

Platinum Futures (/PL)

• Contract size: 50 troy ounces

• Tick size: $0.10 per ounce

• Tick value: $5.00 per tick

• Example value: $50,000 (if platinum is $1,000/oz)

/PL is the primary platinum contract and is used by institutions, manufacturers, and traders interested in precious metals diversification.

Micro Platinum Futures (/PLM)

• Contract size: 10 troy ounces

• Tick size: $0.10 per ounce

• Tick value: $1.00 per tick

• Example value: $10,000 (depending on the price per oz)

/PLM provides an entry point for retail traders seeking exposure to platinum’s unique supply-demand dynamics without committing to full-size contracts.

Speculating vs. Hedging in Metals Futures

Speculating

Traders use metals futures to profit from directional moves. For example:

• Going long gold if you expect inflation to rise

• Going short silver if industrial demand is expected to fall

• Trading short-term price breakouts in copper tied to housing data

These contracts allow for both short-term and long-term trading strategies with real-time pricing and leverage.

Hedging

Metals futures are also used to reduce exposure to price swings in underlying metals. Common use cases:

• Electronics manufacturers hedging copper or silver input costs

• Jewelry makers locking in gold prices

• Miners selling futures to guarantee revenue from future production

• Investors using gold futures to hedge inflation or stock market downturns

Standard vs. Micro Metals Contracts

Micro contracts make metals trading more accessible. They’re ideal for smaller accounts or for those who want to test the waters without significant capital at risk.

Key Benefits of Metal Futures

Liquidity: Gold, silver, and copper futures trade with deep volume and tight bid-ask spreads.

Leverage with Risk Control: Margin requirements allow you to trade large notional values with less upfront capital, but this must be paired with disciplined risk management.

Global Access: Metals markets are influenced by events worldwide. Futures trading hours let you respond to overnight news or early economic reports.

Diversification: Precious metals often behave differently than stocks or bonds. Futures let you diversify without having to hold physical assets.

Inflation and currency hedge: Gold and silver are often used to hedge inflation or U.S. dollar weakness, a key reason they’re popular during times of economic stress.

Risks of Trading Metal Futures

Leverage risk: Using leverage increases both potential gains and losses. A small price move can lead to a significant percentage swing in your account value.

Price volatility: Metals markets can move sharply due to central bank policy, inflation data, geopolitical conflict, or supply chain disruptions.

Expiration management: Futures contracts expire monthly or quarterly. Traders must monitor expiration dates and roll contracts forward if holding long-term positions.

Overtrading risk: Due to lower entry costs and fast-moving prices, newer traders may be tempted to overtrade. Discipline and a plan are essential.

Learning curve: Understanding tick sizes, contract specs, and margin requirements is crucial before placing your first trade.

How to Start Trading Metal Futures

1. Open a futures-enabled account with MetroTrade
   There’s no minimum deposit required to get started.

2. Choose your market
   Begin with Micro Gold (/MGC), Micro Silver (/SIL), or Micro Copper (/MHG) to limit exposure.

3. Understand the contract specs
   Review tick size, tick value, expiration schedule, and margin before entering a position.

4. Practice in a demo account
   Test strategies and get comfortable with contract behavior before risking real capital.

5. Start small and manage risk
   Use stop-loss orders and scale into positions carefully. Never risk more than you can afford to lose.

Final Thoughts

Metal futures offer direct exposure to some of the world’s most valuable and widely used commodities, from the monetary safe haven of gold to the industrial core of copper. Whether you’re looking to hedge inflation, lock in input costs, or speculate on price direction, these contracts provide powerful tools for active traders and businesses alike.

Start with a micro contract, learn the mechanics, and build your strategy with confidence.

Ready to trade metal futures?
Explore Contracts on MetroTrade

Or try risk-free with our Demo Trading Account

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