A contract is a standardised promise
Every futures contract is a promise to exchange a specific thing at a specific time, written in terms nobody can vary. For gold the specification fixes the quantity of metal, the fineness it must meet, the delivery months that are listed, the approved depositories where metal can sit, the minimum price increment, the trading hours and the last day the contract can be traded. Buyers and sellers agree on one variable only, which is price.
That standardisation is what creates liquidity. Because every contract for a given month is identical, your position can be closed by trading with anyone rather than by renegotiating with the person you originally dealt with. It also means the specification, not your provider, defines your exposure. Two traders in different countries using different platforms hold exactly the same contract. If you want to know what one contract does to your account when price moves, the answer is in the specification document, and that document is public.
Contract size is the whole story
The standard gold contract covers 100 troy ounces. That single number drives everything else. If the quoted price moves by one dollar per ounce, the value of the contract changes by one hundred dollars, because the price is quoted per ounce and you hold a hundred of them. There is no separate multiplier to memorise and no pip convention to learn. Ounces multiplied by dollars per ounce is the value.
The micro contract covers ten troy ounces, so a one dollar per ounce move changes its value by ten dollars. A mid sized contract covering fifty ounces also exists in some listings. The ratios between these are exactly the ratios of their ounce counts, which is the point. Nothing else about the instrument changes: same metal, same market, same price, different quantity. When traders say a market is too big for them, what they usually mean is that the standard contract size forces a position whose cash swing per dollar of price movement is larger than the account can absorb. That is a size problem rather than a market problem.
Tick size, and why tick value is not a separate fact
The tick is the smallest price change the contract is allowed to quote. On the standard gold contract the minimum increment is a tenth of a dollar per ounce. Tick value then follows from arithmetic you already have: minimum increment multiplied by contract size. A tenth of a dollar per ounce across one hundred ounces is ten dollars per tick. On the micro, a tenth of a dollar across ten ounces is one dollar per tick.
This is worth dwelling on because it removes a whole category of confusion. People memorise tick values as though they were arbitrary. They are not. If you know the quantity and the increment you can derive the tick value for any contract in any commodity, and you can check whether a platform is displaying what you expect. It also makes stop distances concrete. A stop placed a given number of dollars per ounce away has a cash consequence you can compute before you place the order, which is the only way to size a position deliberately rather than hopefully.
Why the micro exists, and what it costs you
Granularity is the reason. Risk control works by matching position size to the distance between entry and stop. With only a large contract available, many sensible stop distances imply a risk per trade that is too big for a modest account, and the trader is pushed into placing the stop too close so that the arithmetic fits. A smaller contract lets the stop sit where the chart justifies it instead of where the account size dictates.
The trade off is market quality. Smaller contracts generally carry thinner resting depth than the benchmark contract, so the spread measured in ticks can be wider and large orders can move the price more. That matters more for frequent trading than for occasional positions. There is also an administrative point. Several micros are not always interchangeable with one large contract for margin or offset purposes, depending on how the clearing arrangement treats them, so if you plan to mix sizes confirm how your positions net out before relying on it. The general relationship between quantity, movement and cash exposure in lot size and value per point is the same calculation in a different wrapper.
Months, the front contract and the roll
Gold lists several delivery months, but trading is not spread evenly across them. Activity concentrates in one month at a time, usually the nearest actively traded delivery, and when expiry approaches that activity migrates to the next one. Open interest in the old month falls while the new month fills up. This migration is the roll.
Two things follow for anyone reading charts. First, if you hold a position through the roll you must either close it or move it, and moving it means paying or receiving the difference between the two months. Second, a long history chart of futures is not one contract. It is many contracts stitched together, and the stitching method changes the shape of the data. Unadjusted series show a jump at every roll. Back adjusted series remove the jump but alter historical levels, which quietly corrupts any study that depends on absolute price. If your analysis rests on levels rather than on changes, find out which series you are looking at before you trust a conclusion drawn from it.
Margin is a performance bond
Margin on futures is not a deposit toward a purchase and it is not a loan. It is collateral held against the possibility that you cannot pay what you owe. The clearing organisation sets an initial requirement to open a position and a maintenance level the account must stay above. Fall below maintenance and you are required to add funds or reduce the position.
Two features of this surprise newcomers. The requirement is not constant: when volatility rises, requirements are typically raised, which means the cost of holding the same position can increase in exactly the conditions that made the position uncomfortable. And your provider may require more than the clearing minimum, because the provider carries the risk if you fail to pay. Positions are also marked to market daily, so profit and loss moves in cash every day rather than at the end. For a leveraged instrument this is the mechanism that forces decisions, and it is why sizing by stop distance rather than by available margin is the saner habit.
Delivery, and why almost nobody takes it
A gold futures contract is physically deliverable in principle. A seller who holds to the end delivers metal of the specified fineness from an approved depository, and a buyer who holds to the end pays for it and receives a warrant representing that metal. In practice the overwhelming majority of positions are closed or rolled before this applies, because most participants want price exposure rather than bars.
The machinery still matters even if you never use it. Deliverability is what ties the contract to the physical market and stops it drifting away from the metal it references. It also explains why position limits and reporting requirements tighten as expiry approaches, and why the specification is so detailed about quality and location. If you trade only the active month and close well before the end, your practical obligation is simply to be out in time. Know the last trading day of the contract you are holding and treat it as a hard date rather than as a guideline you can revisit.
How this maps onto trading spot gold
Most retail gold trading is not futures. It is spot, or a margin product referencing spot, where the standard lot conventionally represents one hundred ounces, a mini lot ten and a micro lot one. The size logic is identical. What differs is the cost wrapper, the way financing is charged, and the fact that spot feeds publish no real traded volume while futures do. If volume matters to your reading, that distinction is not a detail.
Knowing the futures specification is still useful to a spot trader for three reasons. It tells you where the real traded volume and open interest live. It explains the periodic calendar pressure around expiry and roll. And it gives you an unambiguous reference for exposure arithmetic, which helps when a platform labels things oddly. The wider mechanics of how the gold pair is quoted and the differences set out in spot against futures fill in the rest, and you can watch the behaviour itself on the gold chart. One caveat to close with: specifications are revised by exchanges from time to time, so treat anything here as structure to understand and then verify the current contract document before trading it.
FAQ
How many ounces are in a standard gold futures contract?
The benchmark contract represents one hundred troy ounces of metal meeting a specified minimum fineness. The micro version represents ten ounces, and a mid sized fifty ounce contract exists in some listings. Everything about exposure per price move follows from that ounce count, because gold is quoted in dollars per ounce.
How do I work out the value of one tick?
Multiply the minimum price increment by the contract size. A minimum increment of a tenth of a dollar per ounce on a hundred ounce contract gives ten dollars per tick. On a ten ounce micro the same increment gives one dollar. The method works for any contract once you know both figures.
What happens if I hold a futures contract to expiry?
You enter the delivery process, which means paying for and receiving metal, or delivering it. Almost no speculative trader intends that, so positions are closed or rolled into the next month beforehand. Know the last trading day of your contract and treat it as a fixed deadline rather than a soft one.
Why does my futures chart show a jump at the roll?
Because a continuous chart is several contracts joined together, and consecutive delivery months trade at different levels. Unadjusted series show the gap. Back adjusted series remove it by shifting history, which changes past price levels. Check which method your chart uses before drawing conclusions about old levels.
Is trading micro contracts worse than the standard one?
Not worse, different. Micros let you size a position so the stop can sit where the chart justifies it, which is their main advantage. The cost is usually thinner resting depth, so the spread measured in ticks can be wider and larger orders have more impact on price.
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