Gold Futures and Options Trading
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The History of Gold and Gold Futures Market
The Egyptians mined gold before 2,000 B.C. and the first gold coin was minted on
the orders of King Croesus of Lydia in the sixth century B.C. Throughout history
nations have embraced gold
as a store of wealth and a medium of international
exchange and individuals have sought to possess gold as
insurance against the day-to-day inflationary uncertainties of
paper money. Gold futures and gold options are sometimes used as an inflationary
hedge. Gold is often thought of as a default currency in times of economic
upheaval and depreciating currency values.
The United States backed its currency with gold and silver in 1792.
This continued until President Richard Nixon ended the gold standard
leading to dissolution of the Bretton Woods international payment
system. Gold is an inactive substance and is unaffected by air,
moisture and most solvents. Gold is mined on every continent with
the except for Antartica where mining is not allowed. Gold is
typically found in quartz veins or alluvial deposits as a free
metal. Because gold is virtually indestructable most of the gold
every mined is still in existence whether it be unmined or stored
Gold Futures and Options Quick Facts
100 ounce contract
one dollar move equals $100
trades February, April, June, August,
October, December and serials
Gold futures symbol (GC)
Fundamental analysis of the gold
(Data obtained from The CRB Commodity Yearbook 2011)
China (approx. 13% of world production)
Australia (approx. 10% of world production)
United States (approx. 9% of world production)
Top Demand Categories
jewelry and the arts
Other fundamental factors affecting gold prices
Pure gold is one of the most malleable and ductile of all metals
which makes gold such a vital industrial commodity. It is an
excellent conductor of electricity, is extremely
resistant to corrosion, and is one of the most
chemically stable of the elements, making it
critically important in electronics and other
A broad cross-section of companies in the gold
industry, from mining companies to fabricators of
finished products, can use the COMEX Division gold
future and gold future option contracts to hedge their price
risk. Furthermore, gold has traditionally had a role
in investment strategies, and gold futures and
gold options can be found in investors' portfolios. Learn
Gold future contracts opened for trading in the United States
on December 31, 1974, timed to coincide with the
lifting of a 41-year ban on the private ownership of
gold by U.S. citizens.
Today, gold future prices float freely in accordance with
supply and demand, responding quickly to political
and economic events.
Gold is an effective hedge against inflation. In
addition, gold is often inversely correlated to the US
dollar, making it a good currency hedge. As an asset
class, gold has all the advantages of being
universally regarded as a currency, without what are
all too often the disadvantages of being subject to
the economic and monetary policies of one particular
Contact us for
specific gold future and gold options data.
Exchange-Based Gold Futures Trading
The New York Mercantile Exchange (NYMEX) merged with the
Commodity Exchange, Inc. (COMEX) in August 1994 to
become the world's largest physical commodity
futures exchange. Recently the Chicago Mercantile Exchange (CME) merged with
NYMEX and COMEX to become the largest exchange in the world. The gold future contract is one of
the most liquid of the precious metal future
contracts. During the September 11 terrorist attacks
the COMEX was destroyed but within days the gold
futures and gold options markets were trading again.
This is a testament to the strength and viability of
the metals future markets.
Trading is conducted through two divisions; the
NYMEX division, which trades a variety of energy
futures, platinum futures and options platinum and
palladium futures, and the COMEX division which
trades gold, silver and copper futures and options.
Futures and Gold Option Contract
100 Troy ounces
U.S. dollars and
cents per troy ounce.
Hours (All times are
New York time)
trading is conducted from 8:20 AM until 1:30 PM.
After-hours electronic trading begins at 2:00 PM on
Mondays through Fridays and concludes at 8:00 AM the
following day, with the exception of Friday's
session which concludes at 4:30 PM that same day. On
Sundays, the session begins at 7:00 PM and concludes
at 8:00 AM the following day. (Verify with exchange)
Gold futures trading is conducted for delivery during the current
calendar month; the next two calendar months; any
February, April, August, and October falling within
a 23-month period; and any June and December falling
within a 60-month period beginning with the current
$0.10 (10¢) per
troy ounce ($10.00 per contract).
Daily Price Fluctuation
limit, based upon the preceding day's settlement
price, is $75.00 per ounce. Two minutes after either
of the two most active months trades at the limit,
trades in all months of gold futures and options will
cease for a 15-minute period.
terminates at the close of business on the third to
last business day of the maturing delivery month.
against the gold futures contract must bear a serial
number and identifying stamp of a refiner approved
and listed by the Exchange. Delivery must be made
from a depository licensed by the Exchange.
delivery day is the first business day of the
delivery month; the last delivery day is the last
business day of the delivery month.
of Futures for Physicals (EFP)
The buyer or
seller may exchange a gold futures position for a
physical position of equal quantity. EFPs may be
used to either initiate or liquidate a gold futures
required for open gold futures positions.
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To learn more
about the precious metal and industrial metal
copper futures and
platinum and palladium
Gold Futures Special Report