Gold margin trading has three main functions: the first is price discovery; the second is hedging; the third is speculative profit.
Price discovery is a function of gold futures trading , and gold futures prices are the future manifestation of gold spot prices.
Hedging can be realized in both futures margin trading and spot margin trading. (Hedging is the patent of futures, and spot does not have this feature.) It may be necessary to explain the concept of gold hedging, which refers to the gold merchants in order to avoid In view of the market risks brought about by the uncertain changes in the gold price in the future , the market operation method of locking the risks or locking the profits at the current value is adopted.
Due to the high leverage of margin trading, it has also become a tool for investors to speculate and profit.