Unlike ordinary metal commodities, gold has both monetary and financial attributes in addition to industrial uses. Widely used in industrial, foreign exchange reserves, jewelry, investment and other purposes. The main producers of gold are China, Australia and Russia, with China and India being the largest consumers. In December 1974, the New York Mercantile Exchange (COMEX) began trading gold and is the world’s largest and most active market currently.
Contributing factors:
1. Supply and demand
2. Global economic and political situation
3. USD exchange rate
4. Oil price
5. Interest rate
6. National gold reserves
Advantages:
1. Leading liquidity
At end of June 2017, GC traded 259,000 lots per day on average and reached 461,000 lots in open interest.
2. Flexible trade execution
Access liquidity via the central limit order book, block trades or EFRPs.
3. ≥80% margin offsets
Trade your metals portfolio all in one marketplace to reduce overall margin requirements.
4. Physical settlement
Because contracts remain closely tied to the cash market, your slippage costs are reduced.
5. Nearly 24-huor electronic access
Manage positions as global news and events that impact prices unfold.
6. Futures leverage
Control a large contract vale with a small amount of money.
7. Safety & security
Central clearing mitigates third-party credit risk in a CFTC-regulated market.
8. 60/40 U.S. tax treatment
Get certainty of blended 60% long-term, 40% short-term capital gains treatment.
