Suppose today is July 21, 2015, and your firm is a jewelry manufacturer that needs 2,700 ounces of gold in October 2015 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. Assume that the hedge is market to market. (Gold rates are the 2nd table in the chart attached, Ignore the first table please.)

How could you use gold futures contracts to hedge your risk exposure? What price would you be effectively locking in?

Suppose gold prices are $1,080 per ounce in October. What is the profit or loss on your futures position? (Input the amount as a positive value.)

Commodity Futures Price Quotes for Gold (Globex) (Price quotes for COMEX Gold (Globex) delayed at least 10 minutes as per exchange Prior 1097.1 1106.4 107.1 1103.8 13:54 Jul 21 1103.4 3.3 Aug15 08.0 1108.8 105. 11017 13:54 Jul 21 1103.5 3.3 150545 1106.8 214782 Call Put Sep'15 1077 11080 1096.8 11018 13:59 Jul 21 1103.7 -3.4 1098.5 1108.6 106.7 1101.7 13:54 Jul 21 1104.0 3.4 1098.8 1110.0 107.5 1102.4 13:54 Jul 21 1104.6 3.6 1100.6 1108.8 1099.0 1105.0 13:54 Jul 21 1105.7 -3.7 Apr 16 11013 1110.1 1101.3 1106.6 13:59 Jul 21 1106.9 -3.7 1107.3 1110. 1106.2 1106.2 13:54 Jul 21 1108.1 -3.7 Aug'16 110 110 1109 110 13:54 Jul 21 11045 -3.7 2 6 1113.9 1116. 1111.8 1112.4 13:54 Jul 21 1112. 3.9 1125.0 1125.0 1125.0 1125.0 13:54 Jul 21 1127.5 -4.2 2 1 Tlmes Indicate exchange local time. An asterisk beside the last price Indicates that the price Is from a prevlous sesslon