Gold Futures Trading Shocking Secrets
Get your FREE COPIES of the HVMM Ultimate Day Trading System and the Universal Risk & Money Management Tool just now. Read the story of Richard Samuels, a post office mailman with a head injury and how he made a fortune with these Neutrino Forex Signals. Download this shocking 40 page FRWC Brutal Truth Report FREE that exposes everything about trading robots. The price of gold is linked to economic activity. Most of the world’s supply of gold is in the hands of Central Banks whose primary job is to fight inflation. Central Bank managers know that speculators see the rising price of gold as a sign of inflation. So when the rallies in gold market tend to go out of hand, central banks start to sell gold from their huge stockpiles and gold prices eventually start to fall.
This is precisely what happened when gold prices breached the historical barrier of $1,200 per ounce. However, this fact that central banks tend to be sellers of gold during rallies in the gold market doesn’t mean that gold prices cannot rally for a significant period of time. What this means is that the days of straight up advances in gold prices though likely aren’t as likely as they once were. Bottom line gold is a tricky market.
South Africa is the world’s largest producer of gold accounting for 25% of the global gold production followed by Russia, United States, Canada, Australia and Brazil. Two major influences on the gold prices are the major political upheavals. Political crisis tends to be a major reason for the increase in gold prices.
The second is the influence of inflation. In times of high inflation, wealthy investors tend to flee to the gold as a safe haven asset. However, this influence has been reduced due to the management of gold prices by the central banks. Now gold prices and USD tend to move in opposite direction. This negative correlation isn’t perfect but tends to hold over longer periods of time.
The international benchmark for gold is the London Price Fix and is set in USD quoted twice in troy ounces as the a.m fix and the p.m fix. Spot gold and gold futures trade on NYMEX (New York Mercantile Exchange). Gold futures also get traded on CBOT ( Chicago Board of Trade) with relatively low margin requirements. That means that gold can be an attractive market for small account holders.
Mini contracts also get traded on CBOT. These are smaller versions of the regular contract with much lower margin requirements. Mini contract hold 33.2 troy ounces of gold as compared to the 100 troy ounces in the regular contract. However, the general characteristics and fundamentals of the market are the same. Gold trading combined with forex trading can be a lucrative combination!