When you take a position in, say gold futures, you pay a margin of just 3-4%. That effectively means that you get 25 times leverage. With a margin of Rs.1 lakh, you can take positions in the commodity futures with a notional value of Rs.25 lakhs. That is not possible in the spot market. Leverage works both ways. When the position is profitable the profits get magnified by the leverage. At the same time, in the event of losses the loss also gets magnified by leverage. The crux of the matter is that commodity futures offer you a simple and elegant way of participating in commodity markets. That is unless you want to actually take physical delivery!