Gold is a popular commodity in foreign exchange and futures, because the volume of activity brought about by the continuous demand for metals around the world provides liquidity. Several different metals can be traded in the commodity market. The more popular ones include gold, silver, platinum and industrial metals such as zinc, copper, lead, tin, aluminum, steel, nickel, and molybdenum.
Gold is the hottest trading product in precious metals futures trading alone, with gold trading reaching US$2,700 billion in 2016 alone, and gold and precious metals trading is the most popular deal for investors, mainly based on their popularity and safe-haven needs.
Commodity trading history of precious metals and non-precious metals
With the opening of the Royal Exchange of London in 1571, in order to protect themselves from changes in metal prices and trading volume, many commercial companies first became popular in London and other places. Metal futures contract trading began after the British Industrial Revolution in the 19th century. The LMEX index contract was established in 2000. Several different metals began to be traded on the London Metal Exchange (LME) and several other exchanges around the world. LME is now the world’s largest metal futures exchange.
Gold-related statistics
source: World Gold Council
Ranking of Top 10 Gold Producing Countries in the World
ranking | country | Production / tonne |
---|---|---|
1 | China | 460 |
2 | Australia | 273 |
3 | Russia | 268 |
4 | United States | 214 |
5 | Peru | 170 |
6 | South Africa | 167 |
7 | Canada | 157 |
8 | Mexico | 133 |
9 | Indonesia | 113 |
10 | Brazil | 95 |
Top 10 gold reserve countries in the world
ranking | country | Production / tonne |
---|---|---|
1 | United States | 8133 |
2 | Germany | 3377 |
3 | IMF International Monetary Fund | 2814 |
4 | Italy | 2451 |
5 | France | 2435 |
6 | China | 1842 |
7 | Russia | 1615 |
8 | Switzerland | 1040 |
9 | Netherlands | 765 |
10 | India | 612 |
Gold financial derivatives and CFDs
Most CFD brokers (such as London Capital Group) provide gold as a CFD trading service. Trading gold futures and spot gold as CFDs opens the door to more traders because it requires less capital than trading traditional futures. E.g:
Comparison differences between CFDs gold and futures Future gold contracts
Minimum amount trading gold futures:
The latest price of gold futures on the CME Exchange is $1,810
Contract size of a single gold futures contract = 100 troy ounces
Therefore, the minimum trading volume of a single gold futures contract is 100*1810 USD = 181,100 USD.
*The maintenance margin required by CME Group for gold futures contracts is US$5,400.
The minimum traing amount for gold futures CFDs:
Using the trading conditions provided by London Capital Group, the minimum margin for gold is 0.5%, and the minimum trading volume is 0.1 lots (CFDs contracts). In this example, the minimum cost of using CFDs for gold futures transactions is 61.20 USD (1810*10/200=90 USD).
Gold future trading time
exchange | Tradig time |
---|---|
Chicago Mercantile Exchange | 8:00 PM – 6:00 PM |
London Stock Exchange | 1:00 AM – 11:00 PM |
Singapore Exchange Limited | 9:00 AM – 7:00 AM |
Commodities related to gold include:
- Platinum
- Silver
- Aluminium
- Copper
summary
Trading gold futures and spot gold as CFDs is a popular choice for traders looking for low-cost trading methods. Combined with leverage and a smaller contract size, the capital required to trade gold is minimized as a contract for difference.