However, while you can transact on lay-away at almost any department store, transactions in futures can only be done on futures exchanges. These exchanges are located primarily in Chicago and New York. When you buy a futures contract, the price represents the price at which you are committed to buying the underlying commodity when the futures contract expires. Similarly, when you sell a futures contract, the price represents the price at which you are committed to selling the underlying commodity when the futures contract expires. The price of gold futures constantly fluctuates in response to several factors such as supply and demand, interest rates, and prices of other precious metals.
Futures prices are often different than cash prices for the same commodity.
You may find in some cases that futures prices are consistently above cash prices, in which case the futures are said to be trading at a forward premium, or you may find that futures prices are consistently below cash prices, in which case the futures are said to be trading at a forward discount. Consequently, a futures price can move, for example, from a forward discount to a forward premium. This can happen for commodity futures in which there is a shortage of immediate supply of the underlying commodity. When you buy a futures, you lock in a purchase price for the underlying commodity. Similarly, when you sell a futures, you lock in a selling price of the underlying commodity.