Gold Trading Fundamentals
South Africa is largest gold producing country in the world. Russia, the U.S., Canada, Brazil and Australia are the other leading gold producing countries.
In January 1980 gold futures hit a record high of $1,026 per ounce with the spot market price trading at $875.
Here are a few key points to keep in mind when trading gold:
Political instability can lead to a rise in gold prices. Gold and the Swiss Franc are both seen as safe havens in times of instability.
The influence of inflation is reduced due to the management of gold prices by central banks.
Gold and the US Dollar typically have an inverse relationship.
Central bank actions will influence the price of gold. The Federal Reserve, the European Central Bank, the Bank of England and the National Bank of Switzerland have a heavy influence on the gold market. At times of heightened inflationary expectations the central banks are potential sellers of gold. If the central banks appear to be unable to control inflation this will cause a rally in the gold market.
Spot gold and gold futures trade on the New York Mercantile Exchange (NYMEX). The Chicago Board of Trade also offers gold futures trading, and includes a mini contract for gold. The mini contract represents 33.2 troy ounces while the full size contract represents 100 troy ounces.
CBOT Mini Gold Futures Contract Specifications:
Contract Size: 33.2 fine troy oz.
Tick Size: 10 cent/fine troy ounce (or $3.32 per contract).
Price Quote: Dollars and cents/fine troy ounce.
Contract Months: Jan, Feb, Mar, Apr, May, Jun, Jul, Aug, Sep, Oct, Nov, Dec
Trading Hours Electronic: 6:16 pm to 4:00 pm, Central Time, Sunday-Friday.
Trading expiring contracts closes at 12:30 pm on the last trading day.
Ticker Symbol: YG
CBOT Full Size Gold Futures Contract Specifications:
Contract Size: 100 fine troy ounces
Tick Size: $.10 per troy ounce, $10 per contract
Price Quote: Dollars and cents/fine troy ounce.
Contract Months: First 3 consecutive months; 2 Feb, 2 Apr, 2 Aug and 2 Oct; 5 Jun and 5 Dec
Trading Hours: 6:16 pm to 4:00 pm, Central Time, Sunday-Friday.
Trading in expiring contracts closes at 12:30 pm on the last trading day.
Ticker Symbols: ZG