Gold Dec '19 (GCZ19)
|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) traded sideways through Q1-2019 and posted the low for the year in April of $1,266 per troy ounce. Dollar strength weighed on gold prices as the dollar index rose to a 2-year high in April. However, safe-haven demand emerged in mid-2019 and pushed gold prices sharply higher, from global trade tensions, Brexit risks, and geopolitical risks involving Iran, North Korea, and Venezuela. Gold prices surged to a 6-3/4 year high of $1,559 per troy ounce in September 2019. Global economic growth remained tepid through 2019, which prompted the world's central banks to maintain highly stimulative monetary policies, which sparked demand for gold as a store of value. Fund buying of gold rose steadily into Q4-2019 as long gold positions in ETFs rose to a record 2559.63 metric tons in November. Gold prices fell back slightly from their best levels into year-end on expectations for an unchanged Fed monetary policy after FOMC members in December 2019 forecasted no rate cuts in 2020 and then a +25 basis point rate hike in 2021 and a second +25 basis point rate hike in 2022. Gold prices finished 2019 up sharply by +18.9% yr/yr at $1,523 per troy ounce.
Supply - World mine production of gold in 2019 was unchanged yr/yr at 3.300 million kilograms, which is a record high (1 kilogram equals 32.1507 troy ounces). The world's largest producers of gold in 2019 were China with 12.7% of world production, followed by Australia with 10.0%, Russia with 9.4%, the U.S with 6.1%, Peru with 2.9%, and South Africa with 2.7%.
U.S. gold mine production in 2019 fell -11.5% yr/yr to 200,000 kilograms. Canada's gold mine production in 2019 fell -1.6% yr/yr to 180,000 kilograms, down from last year's record high of 183,000 kilograms.
U.S. refinery production of gold from domestic and foreign ore sources in 2019 fell -2.4% yr/yr to 200,000 kilograms. U.S. refinery production of gold from secondary scrap sources in 2019 rose +11.1% yr/yr to 130,000 kilograms.
Demand - U.S. consumption of gold in 2019 fell -6.3% yr/yr to 150,000 kilograms. U.S. usage of gold is mostly for jewelry.
Trade - U.S. exports of gold (excluding coinage) in 2019 fell -26.2% yr/yr to 350,000 kilograms, well below the 2012 record high of 699,000 kilograms. U.S. imports of gold for consumption in 2019 fell -20.2% yr/yr to 170,000 kilograms.
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