5. Hedging with Futures (LO4) Refer to Figure 24.6 in the text to answer this question. Suppose today is May 25, 2018, and your firm is a jewellery manufacturer that needs 1,000 ounces of gold in October for the fall production run. You would like to lock in your costs today, because you're concerned that gold prices might go up between now and October. a. How could you use gold futures contracts to hedge your risk exposure? What price would you be effectively locking in? b. Suppose gold prices are $1,085 per ounce in October. What is the profit or loss on your futures position? Explain how your futures position has eliminated your exposure to price risk in the gold market. Commodity Futures Price Quotes for Gold (Globex) (Price quotes for COMEX Gold (Globex) delayed 5. Hedging with Futures (LO4) Refer to Figure 24.6 in the text to answer this question. Suppose today is May 25, 2018, and your firm is a jewellery manufacturer that needs 1,000 ounces of gold in October for the fall production run. You would like to lock in your costs today, because you're concerned that gold prices might go up between now and October. a. How could you use gold futures contracts to hedge your risk exposure? What price would you be effectively locking in? b. Suppose gold prices are $1,085 per ounce in October. What is the profit or loss on your futures position? Explain how your futures position has eliminated your exposure to price risk in the gold market. Commodity Futures Price Quotes for Gold (Globex) (Price quotes for COMEX Gold (Globex) delayed