Gold Nov '19 (GCX19)
|Tick Size||0.10 (10 cents) per troy ounce ($10.00 per contract)|
|Daily Limit||5% above or below previous settlement|
|Contract Size||100 fine troy ounces|
|Trading Months||Feb, Apr, Jun, Aug, Oct, Dec (G, J, M, Q, V, Z)|
|Trading Hours||5:00p.m. - 4:00p.m. (Sun-Fri) (RTH 7:20a.m. - 12:30p.m.) (Settles 12:30p.m.) CST|
|Value of One Futures Unit||$100|
|Value of One Options Unit||$100|
|Last Trading Day||Third last business day of the maturing delivery month|
Gold is a dense, bright yellow metallic element with a high luster. Gold is an inactive substance and is unaffected by air, heat, moisture, and most solvents. Gold has been coveted for centuries for its unique blend of rarity, beauty, and near indestructibility. The Egyptians mined gold before 2,000 BC. The first known, pure gold coin was made on the orders of King Croesus of Lydia in the sixth century BC.
Gold is found in nature in quartz veins and secondary alluvial deposits as a free metal. Gold is produced from mines on every continent apart from Antarctica, where mining is forbidden. Because it is virtually indestructible, much of the gold that has ever been mined still exists above ground in one form or another. The largest producer of gold in the U.S. by far is the state of Nevada, with Alaska and California running a distant second and third.
Gold is a vital industrial commodity. Pure gold is one of the most malleable and ductile of all the metals. It is a good conductor of heat and electricity. The prime industrial use of gold is in electronics. Another important sector is dental gold where it has been used for almost 3,000 years. Other applications for gold include decorative gold leaf, reflective glass, and jewelry.
In 1792, the United States first assigned a formal monetary role for gold when Congress put the nation's currency on a bimetallic standard, backing it with gold and silver. Under the gold standard, the U.S. government was willing to exchange its paper currency for a set amount of gold, meaning the paper currency was backed by a physical asset with real value. However, President Nixon in 1971 severed the convertibility between the U.S. dollar and gold, which led to the breakdown of the Bretton Woods international payments system. Since then, the prices of gold and of paper currencies have floated freely. U.S. and other central banks now hold physical gold reserves primarily as a store of wealth.
Gold futures and options are traded at the CME Group. Gold futures are traded on the Bolsa de Mercadorias and Futuros (BM&F) and on the Tokyo Commodity Exchange (TOCOM), the Chicago Board of Trade (CBOT) and the Korea Futures Exchange (KOFEX). The Nymex gold futures contract calls for the delivery of 100 troy ounces of gold (0.995 fineness), and the contract trades in terms of dollars and cents per troy ounce.
Prices - CME gold futures prices (Barchart.com symbol GC) posted their overall low for 2017 in January at $1,147 an ounce as the rally in the S&P 500 to new record highs curbed safe-haven demand for gold. Gold prices ratcheted higher into April as expectations that the Fed may increase the pace of interest rate hikes receded after Fed Chair Janet Yellen at the March 15 FOMC meeting said the Fed intends to keep monetary policy accommodative for "some time." Gold prices fell back into July on strength in the U.S. economy and on slack inflation with the U.S. core CPI in July easing to a 2-1/2 year low of 1.7% yr/yr. However, gold then rallied to a 1-1/2 year high of $1,359 an ounce in September after the dollar index tumbled to a 3-year low. Gold was also supported by increased geopolitical risks between the U.S. and North Korea. Continued strength in equites to new record highs pulled gold prices down from their best levels after Congress passed a tax reform package, which bolstered the outlook for stronger economic growth and tighter Fed policy. Gold prices finished 2017 up +13.6% at $1,3092 an ounce.
Supply - World mine production of gold in 2017 rose +1.3% at 3.150 million kilograms, which is a new record high (1 kilogram = 32.1507 troy ounces) The world's largest producers of gold in 2017 were China with 14.0% of world production, followed by Australia with 9.5%, Russia with 8.1%, the U.S with 7.8%, Peru with 4.9% and South Africa with 4.6%.
Gold mine production has been moving lower in many major gold-producing countries such as South Africa and the U.S. For example, South Africa's production of 145,000 kilograms in 2016 and 2017 was less than one-quarter the production levels of more than 600,000 kilograms seen in the 1980s and early 1990s. On the other hand, Canada's gold production in 2017 rose +5.7% to a record high of 80,000 kilograms. U.S. gold mine production in 2017 rose +3.5% yr/yr to 229,000 kilograms. U.S. refinery production of gold from domestic and foreign ore sources in 2017 rose +0.8% yr/yr to 250,000 kilograms. U.S. refinery production of gold from secondary scrap sources in 2017 fell -2.4% yr/yr to 120,000 kilograms.
Demand - U.S. consumption of gold in 2016 rose +0.6% yr/yr to 165,000 kilograms. The most recent data available from the early 1990s showed that 71% of that gold demand came from jewelry and the arts, 22% from industrial uses, and 7% from dental uses.
Trade - U.S. exports of gold (excluding coinage) in 2017 rose +22.1% yr/yr to 480,000 kilograms, well below the 2012 record high of 699,000 kilograms. U.S. imports of gold for consumption in 2017 fell -35.8% to 240,000 kilograms.
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