Capturing Contango with Gold Futures Spread

| Crypto | 10 seen

On September 21, 2023, I bought 1 October 27, 2023 expiry long Gold futures contract at 1,919.30 and sold 1 November 28, 2023 expiry short Gold futures contract at 1928.4. The difference between both legs is -9.1. To make any profit the spreads of the legs should be less than -9.1 by October 27, 2023.

I have been observing Gold Futres for most of September and in fact, I already opened one such trade in my other stock portfolio, but the reason to open this particular trade comes as a push after I received a bill from my lawyer asking me to pay EUR 480 for her services. as I didn't have free cash available at the moment  - I looked on my smaller stock portfolio and decided to sell away some stock, withdrawing capital and making this future spread trade on Gold.

After selling the stock I was able to raise enough cash for withdrawal and left enough cash for opening one future spread trade on Gold.

Price convergence for Gold Futures spreads

Now, let's hope that the closer the expiry date comes, the narrower the spread will turn, in the end converging with the spot price thus realizing the max gain from the trade.

My idea is to keep this spread open until the expiry on October 27 and I'm looking to close the spread at -2 if so that would earn us about $710 (before commissions from this trade)