Gold Aug '22 (GCQ22)
|Tick Size||0.10 (10 cents) per troy ounce ($10.00 per contract)|
|Daily Limit||10% above or below previous settlement|
|Contract Size||100 fine troy ounces|
|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. King Croesus of Lydia created the first known, pure gold coin 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 gold is virtually indestructible, much of the gold that has ever been mined still exists 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 its currency was backed by gold. 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 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 at the Bolsa de Mercadorias and Futuros (BM&F) and at the Tokyo Commodity Exchange (TOCOM), and the Korea Futures Exchange (KOFEX). The CME 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) rallied to their high for 2021 of $1,962 per ounce in January after the dollar tumbled to a 3-3/4 year low. Gold prices also gained as a store of value after U.S. lawmakers supported a $1.9 trillion stimulus package to revive the pandemic-stricken U.S. economy. Gold prices then trended lower into March when they posted a 1-1/2 year low of $1,673 per ounce. Treasury yields rose and undercut gold prices after the March FOMC meeting showed more policymakers favored an earlier start to the tapering of the Fed's quantitative easing (QE) program. Also, the U.S. stock market trended higher throughout 2021 to new all-time highs, which reduced safe-haven demand for gold. Gold prices then zigzagged higher into November on increased demand for gold as an inflation hedge due to mounting U.S. inflation pressures. U.S. October consumer prices rose at a +6.2% yr/yr pace, the most in over 30 years. Gold prices then fell back into December after the December FOMC meeting showed policymakers projected a faster pace of QE tapering and signaled interest rate hikes would begin sooner than expected. Gold prices finished 2021 down by -3.5% yr/yr at $1,829 per troy ounce.
Supply - World mine production of gold in 2021 fell by -1.0% yr/yr to 3.000 million kilograms, down from the 2018 record high of 3.310 million kilograms (1 kilogram equals 32.1507 troy ounces). The world's largest producers of gold in 2021 were China with 12.3% of world production, followed by Australia with 11.0%, Russia with 10.0%, the U.S with 6.0%, South Africa with 3.3%, and Peru with 3.0%.
U.S. gold mine production in 2021 fell by -1.0% yr/yr to 180,000 kilograms. Canada's gold mine production in 2021 was unchanged yr/yr at 170,000 kilograms, down from the 2018 record high of 183,047 kilograms.
U.S. refinery production of gold from domestic and foreign ore sources in 2021 fell by -0.6% yr/yr to 180,000 kilograms. In addition, U.S. refinery production of gold from secondary scrap sources in 2021 fell by -2.2% yr/yr to 90,000 kilograms.
Demand - U.S. consumption of gold in 2021 rose +35.1% yr/yr to 250,000 kilograms. U.S. usage of gold is mostly for jewelry.
Trade - U.S. exports of gold (excluding coinage) in 2021 rose +34.7% yr/yr to 400,000 kilograms, well below the 2012 record high of 699,000 kilograms. U.S. imports of gold for consumption in 2021 fell by -65.1% yr/yr to 190,000 kilograms.
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